Post lockdown market report
Market Report – Post lockdown
Lockdown – People still want property?
As we approach the end of lockdown. I thought it might be a good time to reflect on the “new normal” look at where we are now. What is required of you as a landlord and have a quick look at market trends and the a (flawed) look to the future
What has the last three months been like for you. A mixture of wearing “tracky” bottoms and old t-shirts? Binge watching Netflix? Constantly shouting “I can’t hear you press unmute” at Zoom meetings? And signing off emails with the phrase “stay safe”?
For Accommodation Unlimited we have kept open. Rents were paid, some maintenance was carried out properties were let and amazingly people moved into new homes. The first week was just shellshock, nobody knew what was going to happen, but slowly we got a plan together. The kitchen table became my office, the telephones were diverted, a new laptop was secured and we were up and running. In the second week we started to get enquiries and we made a decision to view properties via video calling apps like Zoom Skype Facetime and WhatsApp but only for properties where the tenant had vacated. We started to let property about two a week at first, then we started to move people into properties using Docusign remote key collection and internet banking. The expected collapse inn rent didn’t materialise although I think things may yet get worse and we got into a rhythm.
In May we introduced videos as well as photos to our property listings and enquiries rose again. Remote viewing is now normal and although it is not as good as viewing “in the flesh” it is a pretty close second and we can now offer prospective tenants a range of options on how to view a property
Back to normal?
In the last two weeks we have let 20 properties. Very good in the old normal an unbelievable one in the new normal. Why are people desperate to move? Here are my thoughts. Before lockdown most people spent a maximum of about 6 waking hours a day in their home. An hour and a half max in the morning before going to work and 4 ½ hors in the evening from when they got back from work until they went to bed. People didn’t spend enough time to look at where they lived and think about if it was right for them. However after the best part of 3 months stuck in a property and not being able to go out, you soon notice all that’s wrong with somewhere. You decide you need to move and hence that is a major reason why we are seeing enquiries rise. We are also seeing more and more people splitting up. 3 month’s locked in together can concentrate the mind
What properties are letting? Firstly anywhere with an outside space. A two bedroom garden flat in St Andrews attracted 200 emails and telephone enquiries, a garden flat in Redland got similar numbers. Secondly second bedrooms that can be used as an office to work from home are also popular. If working from home is going to be the new normal then trying to work from a kitchen table or from your sofa is not going to be a long term solution. A second room no matter how small means that you can “Commute” to the office and get into work mode. Finally we are seeing the villages and small towns on the outskirts of the city become increasingly popular, the idea of being part of a community and having countryside on your doorstep more than makes up for the fact that there isn’t a great gastro pub at the end of the road especially as the gastro pub is still closed.
House sales are a different story. The papers are full of articles saying that the market is beginning to steam ahead, but is i?. Mortgage advisors and conveyancers are all telling me that yes they are busy with new enquiries, but they expect quite a few deals to fail at valuation stage. There seems to be a consensus that mortgage valuations are going to be lower than the agreed sales price by an average of 7-10% across the board and that will see lots of deals fall through. My advice if you are thinking of investing in a but to let is wait a few months there could be some real value in the market over the next few months
Student tenants are an interesting case. The students union wrote to all letting agents in April (see last newsletter) requesting that we cancel all contracts. There was a rent strike at one of our competitors and I gather a prominent student landlord had his house picketed by students that involved the police being called out. I am not going to add to the debate, other than to say that The advice to tenants on the Government website has not changed it states:
Tenants should continue to pay rent and abide by all other terms of their tenancy agreement to the best of their ability. The Government has a strong package of financial support available to tenants, and where they can pay the rent as normal, they should do. Tenants who are unable to do so should speak to their landlord at the earliest opportunity
This advice is as pertinent to students as it is to professionals
The other student issue looming onto the horizon is what happens on July 1. The vast majority of student tenancies change on this date, and we are getting regular correspondence from students and their parents asking
- What happens if the lockdown is still going on
- If the University changes how it teaches its courses what will we do
The answer to the first question is in the hands of the tenants. If they feel that moving into a shared property is ok then that is their decision. You as a landlord must show that you have made every effort to make the property Covid 19 free – More on that later - and I would suggest that you produce a risk assessment for your new tenants, but ultimately if the tenants have signed an agreement we revert back to the Government website and the paragraph set out above
The answer to question two is a little more nuanced. If either of the Universities outlaw physical attendance on campus, then landlords may have a problem. However although all lectures at Bristol University will be on line only. All seminars tutorials and lab work will be in person, and therefore students will be expected to be in resident in Bristol for their course. UWE has also published guidelines for the academic year 2020/21 You can find them here This is a little more nuanced but the bottom line is that students will be expected to be in Bristol for their course.
Some landlords are offering reduced summer rent this is a personal choice and is not a legal requirement
In conclusion the market is currently buoyant there are plenty of people actively looking for property, whether this is just three months of pent up demand or that the market has bounced back relatively unscathed only time will tell.
The new normal
As we all come to terms with what we can and cannot do in this post-lockdown world. Here is our take on the New Normal when it comes to property
If you as a landlord have tenants moving in during this unpleasantness what steps do you need to take to make sure your property is safe.
- Deep Clean your property – No matter how clean your ex-tenant leaves the property it is incumbent on you to make sure it is Corona free. You must deep clean the property between tenancies no matter how well the outgoing tenants left the property. This should be done at your expense – Call us to arrange.
- Disinfect the keys before handing them over. If you have a key safe leave them in it for the tenants to collect
- Go through the inventory remotely using WhatsApp Zoom Skype or Facetime
- Have a risk assessment prepared for the ingoing tenants – We can get one for you
Property maintenance is still required even during these times. Here is what we consider best practice
- All contractors must wear masks and gloves when visiting a property
- If the tenant is in attendance social distancing must be maintained at all times
- Your contractor is using a key to gain access they must be disinfected
- Once the work is completed any surfaces or door handles that have been touched or had tools left on them should be disinfected
- All contractors should provide you with their Covid 19 risk assessment
- All in person viewings will need to take place under strict guidelines. Masks and gloves must be worn No PPE no viewing!
- Social distancing must be maintained at all times
- If a tenant is still in the property we would recommend that they are not in attendance for the viewing to reduce the risk of infection
- If conducting a virtual viewing to let the prospective tenant direct you around the property. If they want to look behind the fridge show them behind the fridge
- Viewings in an occupied property must take place with at least 24 hours’ notice to the existing occupant. We would recommend 48 hours
- Thanks to AMD Solicitors we have added two additional clauses to our tenancy agreements for properties where the tenants have only viewed remotely. These are designed to cover you should the tenant complain that the property was not as shown. Ask us for details
Tenants are more demanding when it comes to property details. A brief description and a few out of focus photos no longer cut it Tenants expect a video of the property room dimensions and a floorplan we can and will provide all these. We are also looking at introducing 360° photography for certain properties. Of course all this requires the co-operation of the current occupants of the property
We are already seeing some less than scrupulous landlords attempting to pass the cost of making a property Covid 19 free for the new tenants onto the outgoing tenants’ deposit. If you try this as a landlord you will lose out. It is very likely that arbitration will not only strike out this charge but may also strike out other legitimate charges. As a landlord you have an obligation to make sure that your rental property is fit for purpose and safe, and in the current crisis that means deep cleaning between tenancies ideally using a professional cleaning company that can provide written confirmation of works done
So that is our take on the “New Normal “ if you have any questions regarding any of the above, please do not hesitate to contact me.
Peter - I think that your post lockdown market report is very interesting. Thank you for the analysis.Ben Burroughs June 23rd 2020 12:41:42