Phil Spencer: What challenges lie ahead as 2021 gets underway?

Following a turbulent 2020 in which the property market and the professionals working within it excelled in the face of unprecedented upheaval, we now enter 2021 with the optimism that only a new year can bring.

The start of each year represents a good time to look ahead at the calendar and pinpoint potential challenges and obstacles.

Due to the fallout from 2020 and its ongoing impact, this year is shaping up to be an unusual mix of caution and enthusiasm.

Taking this into account, below is an overview of three key themes which could define the next 12 months for estate and letting agents..

The market’s biggest talking point is coming to an end

We recently found out the disappointing news that the government is not planning to extend the stamp duty holiday.

As I tweeted at the time, surely a phasing out of the tax cut is the best course of action, rather than ending on a cliff-edge?

Despite this knock-back, expect the calls for an extension or phasing out of the stamp duty holiday to grow louder as we approach the March deadline.

All hope may not be lost. As pointed out by NAEA Propertymark, the government constantly reviews all matters of revenue. What's more, the Budget has been scheduled for March 3, exactly four weeks before the holiday is due to end.

In the scenario that the stamp duty holiday does come to an end before April, what positives can agents take from this challenge?

There is no doubting the buzz created by the stamp duty holiday in the second half of 2020. Even if it is coming to an end, it is likely to remain a significant talking point for buyers and sellers.

This gives agents the opportunity to continue to use stamp duty as a starting point to meaningful conversations, explaining the benefits of buying and selling in the current market even if there is no tax cut.

Whatever the outcome, the stamp duty holiday can have a positive legacy for agents. It has provided a huge number of additional transactions over recent months, many with consumers you may never have come into contact with before.

The transactions rush has also taught us an awful lot about the home moving process and its limitations. Hopefully, workloads can return to more manageable levels in the second half of 2021 and long-term the industry and government can use the stamp duty scramble as the basis to expedite improvements to a largely outdated and inefficient system.

Big Budget on the way with more taxes in the pipeline?

As mentioned above, the date for the Budget has now been set for Wednesday March 3 2021. The Chancellor has said the statement will 'set out the next phase of the plan to tackle the virus and protect jobs'.

Alongside the opportunity to address the stamp duty holiday issue, the Chancellor may well look at property taxes - specifically Capital Gains Tax - as a way to close the pandemic-related deficit.

A recent report from the Office for Tax Simplification suggested that CGT rates Rates be doubled and the number of exemptions reduced, which it estimates could recoup as much as £14 billion a year for the Treasury.

The independent report was commissioned by the government and while it is currently mulling over the proposals, the March Budget seems an opportune moment to give its verdict on whether CGT changes are needed.

If they were to be introduced, they could create a new headache for the industry - namely a buy-to-let property sell-off as investors look to avoid a hefty future tax bill.

Whether this does or does not happen is out of agents' control. However, landlords will need your advice on how they could be affected and the pros and cons of selling investment properties.

And while CGT changes could present rental stock issues, there may be short-term opportunities for agents' sales departments to generate some additional business.

March 3 is shaping up to be a big day for the industry which could have a significant bearing on the remainder of the year. Until then, agents need to keep on top of the issues that are likely to come up and a united industry must continue to lobby for positive change.

Dealing with the certainty and uncertainty of new regulation

Alongside lockdown and furlough, uncertainty was one of the most used words of 2020. With 2021 now underway, it seems likely that uncertainty will continue to be the order of the day.

When we look at the property market, there remains uncertainty around some key pieces of legislation which will directly affect property professionals. These include RoPA and the Renters' Reform Bill, while we must also consider the impact that Brexit will have on the Right to Rent scheme.

As well as the uncertainty of outstanding measures, there are other rules coming into play with dates already confirmed. Most of these relate to increasing regulation of the rental market as has been the case for a number of years now.

The deadline for compliance with Client Money Protection rules is set to pass in April, while the legislation covering mandatory electrical safety checks will be extended to cover existing tenancies during the same month.

Although increased regulation is nothing new for agents, keeping on top of everything while also managing the long-term impact of the pandemic will be the key focus for 2021. A combination of outstanding staff, agile working practices and best-in-class PropTech can help agencies to navigate their way through the next 12 months.

Uncertainty may still be the word on everyone's lips, but there is strong hope that this year will be a lot more positive than the last.

*Phil Spencer is a presenter, author, businessman and property investor. Phil’s consumer advice platform Move iQ, is a website, YouTube channel and podcast. Each preserve and reflect the same impartiality that consumers trust and base their property moving plans. Coming soon: Move iQ Pro, Phil’s resource to support the property community. Stay tuned ready for launch!