On 25th November 2020, the chancellor, Rishi Sunak, released his spending review for 2020/21.

It came as no surprise that his main concern is the current COVID pandemic, prioritising jobs, businesses and public services by allocating £280bn to get the country through Covid-19.

There will be:

£3bn for the NHS
£2bn for transport
£3bn to local councils
£250m to end rough sleeping

In total, the funding to tackle coronavirus will be £55bn.

However, the chancellor is realistic in his bleak outlook for the economy’s growth. His forecast suggests that:

The economy will contract by 11.3% - the biggest decline in three centuries
It will take until 2022 for the economy to return to its pre-pandemic size
GDP will grow by 5.5% next year, 6.6% in 2022, 2.3% in 2023, 1.7% in 2024 and 1.8% in 2025
In July. the OBR said that we are set for a 12.4% plunge in GDP this year
This compares with estimates made at the start of November from the bank of England for an 11% fall in 2020

He described the situation as causing ‘long-term scarring’ which would be as late as 2025.

Due to our state of economic emergency, borrowing is high, with a budget deficit of £394bn this year, or 19% of GDP - the highest level in peacetime.

Borrowing will remain at £164bn next year and at about £100bn for the remainder of the forecast.

Public Sector Pay

We would all agree that those working in the public sector, especially the NHS deserve a pay rise. Sadly, as a result of the information above, this just isn’t possible - with the exemption of 1 million nurses and doctors in the NHS.

Pay rises for the public sector will be paused
2.1 million public sector workers earning below £24,000 will be guaranteed a pay rise of at least £250.
The national living wage will be increased to £8.91 an hour, and extended to over-21s.
Overall unemployment is forecast to peak next year at 7.5%

With living costs rising, but with many people unable to receive a reasonable pay rise, this means that fewer people will be buying their own homes. It is predicted that almost 25% of households will be renting privately by the end of 2021. Studies by ‘Knight Frank’ reveal that 68% of renters expect to still be living in rented accommodation in three years time - the most common reason being the difficulty saving for a deposit.

What Does This Mean for Letting Agents?

If this prediction is correct, this means that letting agents are going to be faced with an increased workload. House viewings will go up, the number of landlords and tenants to look after will increase, and therefore accounts will become more time consuming to manage.

With so many different payments coming in from tenants, invoices for services going out, and matching all of this up with the correct landlord before paying them, accounts can be a drain on your time. This job, which can take up a week each month, depending on how many you have to manage, will inevitably increase if the number of people renting in the UK also increase.

LettsPay offers a solution to this growing problem by covering all of the agents accounting needs from sending out payment reminders, to managing and splitting funds. Every penny is traced, which allows accounts to be reconciled with ease, and ensure that the correct payments are made on time. Linked to each agent account, landlords have their own dedicated account with their unique sort code and account number; eliminating the need for a bank account at a time where many banks are closing their agent accounts down. Statements are automatically sent to landlords and suppliers, as soon as they are paid, cutting out a tedious process traditionally taking up man power. Rent payments are flexible and can be collected via direct debit or standing order, with an automatic reconciliation once a payment has been made. If a tenant is having a tough month, a payment can easily be made by a friend or family member. As well as all of this, foreign landlords are just as easy to manage, with a price well below that for the same service carried out by a bank.

When workload is likely to increase, it has never been a better time to invest in a time saving accounting platform.