2021 Forecasts after the most unpredictable year ever

By Simon Tolson on 16th Nov 2020
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2021 Predictions

He who lives by the crystal ball soon learns to eat ground glass

It is often said there are two types of forecasts ... lucky or wrong and that’s probably true, however I also like the quote "It is far better to foresee even without certainty than not to foresee at all."  Short of forecasting a zombie apocalypse it’s hard to imagine that anyone could have come close to predicting the year that we have just had and to say things are less than certain for the next year is an extreme understatement.

Every business has to plan for expenditure, resources and staff and the only way to do this is by forecasting revenue so we have no choice.  Giving someone directions by saying ‘I wouldn’t start from here’ is sometimes tempting but ultimately not very helpful so I’m going to plough on and do my best.


I’m writing this in mid November, half way through the lockdown, we’ve just been told that there is a vaccine that works and the four nations are trying to work out a consistent approach to allow travel and family get togethers for Christmas.  Things are changing on a daily basis let alone across weeks and months so we will just have to continue to adapt. In the longer term we all hope that the vaccine will allow us to get back to normal though some things will have changed forever.  The logistics of mass immunisation mean that travel is sure to be affected right through 2021 which is likely to continue to boost the staycation market

Sandbanks Holiday Demand

Since the last lockdown demand has been unprecedented for everything that we measure.  Traffic to the site is 50% up year on year, bookings through September and October were up by a similar amount and advance bookings for 2021 are more than double compared to this point last year.  I have a forecast model which has been crafted for many years that I use to predict occupancy and income for new properties which is going to need serious surgery or maybe even throwing away and rewriting. I’m determined not to get carried away but it’s hard to predict anything other than a very strong year, even if we have intermittent lockdowns. 

The Zoom Boom

It has been established that pretty much everybody with a desk job can work from home and this is going to have a profound effect on our business.  Suddenly you don’t have to lose a full week or even any holiday to come and stay with us.  Who would risk a precious week’s leave for an October holiday?  Now you can book the week and if the weather is awful work most of the time and just take the nice days off.  Weekends can be extended with a work day on Friday or Monday and some people may decamp for a longer stay running into weeks or even months.  I’m forecasting that this is a permanent change that will boost bookings for years to come.

New Properties

One of the challenges we have is that we can only sell the weeks we have got, I can’t order up a delivery of new properties however the increase in demand is being matched by an increase in supply.  Working from home means you could be working from your second home and being two hours from the city means we are in the perfect position to take advantage of this.  We are seeing a steady stream of properties joining up and the volume of enquiries from people who are looking at this stage makes me predict a steady growth through 2021 and beyond.

Property Market

We don’t do sales so I’m not really dialled in to what is going on.  The market has certainly been hot and we’ve seen some notable sales at premium prices.  Whether this is a bubble or part of a sustained period of growth is hard to predict.  What we can say is that the factors driving the market are not going away- as well as the increased interest in second homes rock bottom interest rates make borrowing cheap and also mean that yields from many investment classes are close to zero.  If you have the capital a quality property on Sandbanks is as good a place as any to park your money.  I’m also sensing a change of attitude brought about by the pandemic- what’s the point in working flat out to have even more money in the bank, why not use it to buy something you can enjoy?  We’ve also seen luxury cars , boats, jetskis and other watersports equipment selling surprisingly well this year.  I’m going to sit on the fence here and say it’s 50/50 regarding growth but I’m sure there won’t be any significant reduction in prices.


One thing there is no prize for predicting is that taxes are going to have to go up at some point to pay for the huge costs of the pandemic.  The headline income tax rate seems to have become untouchable apart from at the highest income levels so it’s hard to see the basic rate changing.  Employers national insurance, pension tax relief, insurance premium tax and other more technical changes will be on the agenda but that won’t be anywhere near enough to address the situation.  I’m predicting lots of stealth changes that most people don’t notice.

Capital gains tax is squarely in the firing line and offers an opportunity to raise considerable revenue from a tax that most people don’t pay.  The government has just released a report advising that it should be doubled to bring it in line with income tax and this is pushing at an open door- why should those selling shares or property pay a lower rate of tax than our hard working nurses on the front line?  It was only reduced from income tax level in 2008 anyway so this is an easy sell.  What is conveniently forgotten here is that we used to have taper relief which recognised that the value of an asset is eroded over time by inflation so your tax bill would be reduced significantly for say a second home that you had owned for some years.I predict that the rate will be brought into line with income tax without taper relief.

Qualifying furnished holiday lets are subject to entrepreneurs relief reducing capital gains tax from normally 28% to 10% so this could become a reduction from 40% or 45% to 10% in future.  A lifetime limit of £1m was introduced recently but even if you have exceeded this the rate is 20% so may still be a huge benefit.  As the new threshold will generate substantial revenue in future I’m predicting that there will be no further changes.

VAT is a headline tax that everybody notices and 20% is a high rate by international standards so an increase would seem unlikely.  It’s also seen as a burden on business and right now has been reduced to 5% for hospitality enterprises until the end of March.  As an agency we are not considered a hospitality business so charge the full rate on our fees.  Owners do not have to charge vat unless their gross rental exceeds £85,000 which at one time would have seemed irrelevant but we now have a number of properties whose annual rental exceeds this.  They have to charge vat currently at the reduced rate.

I predict that the hospitality vat discount will be extended for a year and that more businesses will qualify or perhaps another tier of say 10% introduced to target help at other sectors


This would have been dominating the news in normal times and I would probably be writing an editorial about it every month yet it is now reduced to a footnote.  The effect on our business is more about the economy and customer sentiment rather than any direct impact due to travel disruption or bookings from Europe.  I predict a fudge at the last minute which drags on through next year and may be called a deal- really putting my neck on the block here!

And Finally

I’ve actually enjoyed thinking about all this and it’s fun to put some opinions out there to be shot down.  In the end I don’t expect to outperform the proverbial monkey with a dartboard but there tends to be a regression to the mean with errors balancing each other out so I’m going to work on my forecast as usual and it probably won’t be too far out.