Two weeks ago marks a year since the very first COVID-19 case was recorded in China, so what drastic changes have landlords felt since then and what are they doing differently to survive a year on, here in the UK? With unemployment rising at the fastest rate since records began and predicted to hit 2.6 million in the middle of 2021, as well as the government introducing wide-scale protection schemes for tenants, the economic map has completely changed for landlords. This does not even mention the immediate physical effects of COVID-19 itself which have hindered human contact (for example landlords holding property viewings), forced the majority of businesses into lockdown and immensely reduced operations globally.
Since unemployment and uncertainty has spread across the UK the government has introduced major schemes to protect tenants and increase fluidity in the property market such as the stamp tax duty holiday. This significant reduction in tax on purchasing a house has spurred growth in the buying market but has meant rental demand has decreased. The rising unemployment rate has led to many moving out of rental homes in inner cities and fleeing for cheaper more remote properties, further lowering demand and forcing landlords to massively drop the price of rent. On top of this, with financial uncertainty and people physically unable to travel, there has become a greater supply of long-term rental properties on the market from what’s called the ‘airbnb effect’ – with short-term landlords switching their properties to long-term rentals.
Not only does there appear to be less money for landlords but there are currently very few government schemes available in place to help them. The government introduced a tenant eviction policy whereby 21st September 2020 was the first date landlords can bring their eviction cases to the courts and from the 29th August landlords were required to give their tenants six-months notice if they wanted them out of their property. Now we’re in December and bailiffs are still having to sympathise with tenants as part of the government’s ‘Christmas Truce’ plea, delaying court approved evictions until the new year. There is no letting up as landlords are still forced to pay council tax on empty properties of prematurely evicted tenants. Landlords are barely even eligible for any deferrals of their own either. From July 2020 they could defer the second payment on account towards income tax for the 2019/20 tax year to January 2021 but may end up having to pay the deferred tax, plus the tax owed and the first payment on account upon due date.
All this has however pointed out salient structural flaws and improved the narrative on the importance of digitisation in property and communication between landlords, tenants and agents alike – with many renters unable to make payments the relationship amongst all is as important as ever. Goodlord for example, have managed to raise £10m in trying to speed up rental digitisation and improve transparency in the rental transaction between landlords, tenants and agents. Coronavirus not only slowed the transaction process down but brought to light how slow and outdated processes amongst governmental bodies and local authorities can be. Peter Guthmann argued that without digitisation in its most basic form the tumble of productivity would have been ‘impossible to control’ – this has accelerated digitisation and will in turn eliminate breaks in processes and increase the speed of transactions for when demand in the rental market inevitably recovers.
After a very testing year a lot of landlords will be extremely relieved to hear today’s confirmation of the Pfizer/BioNTech vaccine being rolled out across the UK next week and it will be very interesting to see how the market reacts to this over the coming months. Whilst we’ve seen demand fall and rent prices slashed in most places, it has forced landlords into action and stimulated faster digitisation which means when the rental market does bounce back, transactions will be far more streamlined. Moreover, if anything communication has only improved amongst landlords, tenants and agents with more of a focus on finding the perfect equilibrium between landlord and tenant to minimise risk for all parties, meaning everyones satisfied.