To say the year 2020 will be remembered for years to come is perhaps an understatement. No one could have predicted the life changing circumstances that Coronarvirus has brought to people through out the world. But how is Coronavirus affecting the rental market for tenants and landlords alike?
The general public have been locked down at home for months now.
Renters are now realising that perhaps their current location is not where they want to be long term. With the prospect of working from home becoming long term, renters are desiring the perfect office space at home.
Renters are looking to move further afield from cities and commuter hubs to get more property for their money. For example a one bed flat in the city centre will be the equivalent if not cheaper than a 3 bed property in the country side. The appeal of living in quieter areas with more green space is becoming too appealing to pass up.
Although the demand for houses are continuing to rise, the same cannot be said for HMOs (house shares for multiple occupation). Rooms in shared accommodation were the perfect starter rental property for those individuals delving into their first time job; all inclusive rent, furnishings included and majority of them located in city centres for easy commuting. However, these new starters are finding first hand that working from home is now becoming the norm and are opting to stay at home.
The concept of staying at home following the Governments initial lockdown meant that millions of jobs were at risk.
To combat this, the government introduced the Coronavirus Job Retention Scheme (CJRS) – also known as the Furlough scheme, which meant employees were entitled to 80% of their monthly income up to £2500. This loss of income understandably meant tenants having to tighten their belts and proposition landlords to pay a reduced rent or arrange payment plans. The NRLA has previously suggested that private sector rent arrears in England resulting from the pandemic could total as much as £437m.
For some landlords, this meant having to take buy to let mortgage holidays.
Majority of lenders will allow up to a 6 month holiday (dependent of personal circumstances) and provide tailored support. It is important to take time to understand the implications of holidays and deferred payments. It is also important to consider how any deferred rental payments could affect tenants as they are ultimately responsible for any rent arrears.
The Government have also introduced the Coronavirus Act 2020. The Act provides protection to social and private tenants by delaying when landlords can start proceedings to evict tenants. They have increased the required notice period length from the standard 2 months, pre COVID19, to 6 months.
The stay on possession proceedings expired on 20 September 2020. Landlords will now be able to progress their possession claim through the courts. However, this will require courts to prioritise the most extreme cases. Landlords could find that this back log of claims could delay things further.
Rents dipped across the majority of regions monitored by GoodLord during April. On average rental costs for the UK as a whole fell by 2%, from £878 to £861 per property, per month. In positive news, the East Midlands, along with South Midlands, recorded an average increase of 1% on rentals.
Goodlord’s Rental Index also showed volumes of new and completed tenancies dropped rapidly in March and April (around the time of the initial lockdown) before increasing and stabilising towards the end of the year.
The increasing uncertainty surrounding employment and job security means that the rental market is likely to continue changing until some sort of normality resumes. First time buyers are likely to delay purchasing a home and continue to rent. Tenants will continue to have peace of mind with the cessation on evictions. Landlords will now need to abide by the new terms set out in the Coronavirus Act. Unfortunately for all, Coronavirus will continue to affect the rental market and all other aspects of life.
If you are a long standing landlord or a first time landlord, contact us for some first hand advice on ensuring your property is let efficiently during these unpredictable times or feel free to read our New Landlord Guidance blog.
For Tenant Find landlords, perhaps this is the time to consider an award winning agent to help assist you? Contact us today on firstname.lastname@example.org or 0115 981 9651.