If you were asked to describe the property market in 2020, you could pick many words. Buoyant, depressed, dysfunctional, surprising, volatile, even crazy. And they’d all be right. The unique combination of factors from this year have created strange times in many markets, not only property.
The numbers for this year, between May and September, make for concerning reading for landlords. In the wealthiest 10% of neighbourhoods, there was a small increase in the number of rentals of 1.3%, compared to the same time last year. New instructions also increased by 4%.
However, in the lowest 10% of neighbourhoods, rentals fell by 14.8%, and new instructions dropped by 17.7%.
Overall, there was a fall of 5.3% on average across the UK.
What’s happening in the rental property market?
Several factors are coming in to play now. Covid has caused problems for every company in the UK. Cutbacks and redundancies have followed, even with the furlough scheme in place. Tenants in more impoverished areas have been negatively affected the most, which has either caused problems with affordability or their ability to move from rented to purchased homes.
First-time buyers are also significantly affecting the rental market. Mortgage companies are tightening up on the lending criteria, and high loan-to-value mortgages are becoming harder to obtain. As such, these buyers aren’t able to move out of the rental market and are actually pushing rental prices up outside of London as they look for larger family homes to rent.
The lockdown effect on the property market
As people were forced to spend time in their homes during the lockdown, many of them realised how little space they had, particularly those renting flats. Trapped inside a flat with only one hour per day outside has been physically and mentally challenging for many people.
Families in purchased properties have found they didn’t have enough space to all co-exist daily. When the kids are at school and parents are at work, there’s plenty of room. But when the schools closed and parents had to remote-work from home, finding a quiet space to work was difficult for many.
Even after the lockdown, many people are still forced to work from home. Anecdotal research shows a significant number have also embraced it as a new way to work and want to maintain the lifestyle that remote working has provided. But they need a bigger house, which means they need to move to the suburbs.
Many inner-London boroughs report a significant fall in rentals. Perhaps unsurprisingly, most of the outer London boroughs have reported an increase in rental demand. This picture is mirrored around the country with many major cities reporting similar trends.
Good news for the property rental market?
So, it should be great news for the rental market. But it isn’t.
A recent survey by the National Residential Landlord’s Association (NRLA) shows a worryingly high proportion of landlords are concerned about the future and believe their businesses will be negatively affected.
Although the demand for rental properties is there, the location of those requirements is changing, and landlords in city centres are being faced with unoccupied properties. Simultaneously, the demand for out of town properties is exceeding demand.
Most experts agree that our economy is heading for a deep recession in 2021 with some predicting the worst recession ever experienced. Clearly, this will compound the current problems in the rental property market. As unemployment increases, so will rent arrears. Current estimates put the total rent arrears, resulting purely from the pandemic, at £437m in England. While landlords have tried their best to help tenants in distress, there’s only so much support they can give.
The summary information is, perhaps, not too surprising. As a result of all these factors, 30% of landlords surveyed said they would be looking to sell their flats in the next twelve months. Conversely, only 16% are looking to invest further.
How do you sell your flats?
If you’re in the unfortunate position of needing to offload your block of flats, where do you start? Commercial estate agents can help, but only as far as finding a buyer.
At sellmyflats.co.uk, we purchase entire blocks of flats directly from landlords at market prices. We have funds available to buy your apartments at short notice. Many of our transactions are completed in less than six weeks from initial contact.
Alternatively, call our office now on 0161-638-5970 to discuss options with us now.