“It’s lettings Jim, but not as we know it”
June update following COVID-19 and getting back to work
Having gladly returned to work – albeit with some trepidation (its nice sitting looking at my emails in a garden with a cold beer and my family surrounding me) – and I can now start dissecting what the global pandemic is really going to mean in terms of the economy and the letting industry specifically.
I can tell my staff are happy to be out of their homes (sadly their routers were located in bedrooms in the main so did not have the luxury of being able to be in the garden!) and we have sufficient space to social distance. It has not been without its challenges and, like the beginning of the lockdown, we are having to come up with procedures as situations arise. I am sure every industry is the same; in fact I cannot think of any aspect of life that will not be affected by this pandemic.
In the month we have been back to work we have most certainly let properties but the market is reasonably static in terms of demand – as you would perhaps expect. I do not sugar coat the market and I am aware of attempts within the industry to ‘talk it up’ – I would rather be straight and tell it how it is to my clients.
It seems very odd to be letting properties to people who have not even stepped foot into the property but this is what has happened on at least 4 occasions since we returned. So, things are moving but it is the landlord that understands the market limitations, and is being realistic with price, who is getting his/her property tenanted.
In reality this is normally the case in a good market but of course landlords have been spoilt in Brighton and Hove and surrounding areas for some years now with an under-supply or property and strong demand. The simple fact is that with peoples incomes being severely cut, and the economy contracting, we have to be realistic with price and may have to be for some time to come.
This brings me on to the quality of tenant within a property. Landlords should be doing everything they can to retain good quality tenants currently – they really are worth their weight in gold!! With the potential to have to wait for months for a Court date for possession proceedings; is it really worth issuing notice to a tenant because they are a few hundred £’s in arrears? I would argue not.
Now of course, there are those tenants that cause an issue in normal times and have attempted to use COVID-19 to their advantage and I am certainly not suggesting tenants are somehow placated when they are in breach of their tenancies. Notice can and still should be given where appropriate.
However those that are struggling, and can be helped, will most likely clear any arrears accrued. They will also then be long term thankful tenants who look after your asset.
So what do I think will be the long term implications/trends in the rental market;
- I personally feel that a contraction of house prices is inevitable later in the year so, if you have finances, it will be a good time to invest in property.
- The government may make more changes to possession legislation meaning a good letting agent is vital to ensure you are protected re this and the myriad of legislation that affects the sector.
- More tenants will be in receipt of Government financial assistance meaning that landlords will be less likely to refuse an applicant that is not in full time employment. In fact you may have more guarantees from tenants receiving local authority assistance – you cannot now advertise a property with the strap line of ‘No DSS’ but you can still decide as to whether you would let to someone who is.
- I think collaboration between a good landlord/letting agent and tenant is vital and COVID-19 and the UK Government has really emphasised this over guidance for rent arrears during this crisis. Good communication ensures happy tenants paying their rent, without void periods, and who respect and look after your asset.
So to summarise; whilst there are clearly uncertain times ahead people need homes and will continue to need to let. Be realistic and reasonable to ensure your property is tenanted with good quality tenants to minimize any voids whilst protecting your asset.