The COVID19 pandemic meant that the private rental sector, along with many others, entered unchartered territory. Now that we are some months on from the initial crisis period, we wanted to take some time to explore the ongoing effects of COVID19 on the private rental sector.
Will there be an eviction crisis?
In the early stages of the pandemic, panic quickly set in. As people found themselves facing a reduction in working hours or even worse, redundancies – hysteria grew over rent falling into arrears and mass evictions taking place.
Instead, what we began to see was landlords and tenants coming to flexible arrangements that allowed both parties to adapt and navigate the situation. For example, we have witnessed landlords offering their tenants reductions where possible and in extreme cases, rent deferrals. Going one step further, there have been cases of landlords delivering care parcels to tenants, or even offering free or reduced fee accommodation to NHS workers.
Despite the widespread panic and sensationalist headlines, research carried out earlier this year by the NRLA uncovered positive findings. 59% of respondents had not had their income affected during this time, and the Coronavirus Job Retention Scheme covered the 21% that had been furloughed. 90% of tenants continued to pay their rent as usual.
On the other side, 29% of landlords reported that they expected to face some level of financial hardship as a result of the pandemic, and 24% said they had become liable for Council Tax payments.
We don’t foresee an eviction crisis; we predict there may be an increase in rental renewals – this is based on data collected throughout the year and the implementation of the second lockdown.
Will we see the volume of smaller landlord’s decline?
For landlords with one or two properties, potentially supplementing an income or acting as an investment opportunity, letting out their properties may no longer seem like the excellent investment it once was.
This year smaller landlords have faced changes to mortgage interest tax relief and capital gains tax – and this was before the Coronavirus pandemic. These changes could mean that we enter a private rental landscape that is hostile for small landlords.
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What about student landlords?
The lack of clarity from universities has been an ongoing issue for landlords of student accommodation. Many found themselves with empty properties when students returned home earlier than anticipation in the first lockdown, and this meant releasing students from their rental contracts.
After much uncertainty, students did return to university in September. However, many institutions have found themselves facing backlash after backtracking on earlier claims of face-to-face lectures leaving landlords vulnerable once again. Will students decide to save money and work remotely from their family home?
Further to this, student accommodation rental prices had already dropped, as it becomes clear that there was less opportunity for part-time work between lectures. This market continues to be the most at risk.
Could we see the stigma around renting come to an end?
The new wave of ‘generation rent’ helped to dispel the outdated notion that renting is just a stopgap before buying a home. It seems that COVID has also contributed to removing stigma about renting.
We anticipate that people of all ages and walks of life will view renting as a positive, and flexible housing choice and that we will begin to see tenants agree to longer-term rental agreements.
We could see growth in the rental economy.
Will renting in rural areas become more popular?
Lockdown saw many individuals begin to appreciate green surroundings and the value of outdoor space; as a result, we predict that renting in rural areas will grow in popularity, whereas previously neighbourhoods close to town centres were popular.
This rings especially true as it looks like remote working is set to continue in the future for many businesses, meaning the commuting distant becomes less of a sticking point when choosing where to live.
Will virtual inspections and viewings continue after the pandemic?
The COVID19 pandemic forced many sectors and individuals to explore the virtual means of doing business, the rental industry included.
Landlords and Letting Agents have also adopted this approach, and we think it is one that will continue. For both parties, the viewing or inspection process could be inconvenient and inefficient, often taking time to align diaries and even meant extra journeys with landlords or agents travelling to properties and tenants travelling to and from workplaces to make them.
Using video calls is a much more convenient, and less intrusive way to conduct viewings and inspections, while still empowering Landlords and Letting Agents to continue to keep records and arrange repairs where necessary. This virtual approach opens up the lines of and improves communication.
We understand that the pandemic has not been a picture of positivity for all. Still, we have high hopes that long-term, it will change the perception of renting, creating an opportunity for growth and recovery from the initial shock.
If you are a landlord and looking for guidance or help to manage your rental property, please get in touch with a member of the Lettings team today.