May 4, 2020
What with all that’s going on right now, it’s difficult – at least for the man/woman on the street – to judge the impact of COVID-19 on the private rented sector.
But as the Landlord’s Estate Agent, we’ve assumed the responsibility and taken a lead role.
Here at Portolio, we were more than curious about the impact of COVID-19 on landlords like you. So, we decided to ask you directly – with some interesting (if not always entirely unsurprising) results.
We put out a survey via email and social media, with a number of questions relating to COVID-19 and its effects on various aspects of owning, buying and selling tenanted property. All participants were given the option to remain anonymous.
We’ve collated your answers, extrapolated the data and done all the necessary number crunching, so you can take a good look at a summary of our findings, below.
We’ve also weighed in with our own take on these findings, and provided some key tips and advice for getting through the current lockdown, whether you’re thinking of buying, selling, or just keeping with the status quo.
Q1. Has the impact of COVID-19 meant your tenants have had trouble paying the rent during lockdown?
Out of all the landlords we surveyed, a staggering 50.5% of you said your tenants had trouble paying their rent – which was a higher percentage than we’d expected. This made us really curious to read some of the written responses you’d submitted, with some of you thinking this number is likely to increase the longer the lockdown continues.
However, the main thing we picked up from the responses received was that landlords had started reaching out more to their tenants. Keeping communication lines open is so important, and both parties seem to be recognising the other a little more.
It’s really humanised the situation for a lot of people, which can never really be a bad thing.
After all, it’s easy for landlords to take tenants for granted, and tenants don’t always think of landlords as real people, so the one good thing to come out of lockdown is maybe the human element, and a stronger sense of community through these increased lines of communication.
Quite a few of you have mentioned offering a 25% discount to your tenants, which is something that can either be made up later on, or just completely dropped. This is entirely down to your discretion, and there’s a few different approaches going on.
Q2. Would you struggle to pay your mortgage if the tenant didn’t pay the rent?
Almost a third of you said you would struggle to pay the mortgage on your tenanted property if your tenants didn’t pay the rent. This is cause for quite a high degree of concern should the coronavirus continue to have an impact on rental payments even after restrictions start to ease.
You’ve probably heard the old nugget of always keeping a month’s rent sitting in your account for rainy day purposes. After the pandemic, we can see a few of you increasing this amount to pandemic-proof your portfolios and investments going forward.
This situation just highlights how little we can afford to take things for granted, and certainly does make the case for higher contingency funds, now more than ever before.
Q3. Have you requested a mortgage holiday for your buy-to-let due to the impact of COVID-19?
At the time of survey, 58% of you had not requested a mortgage holiday – and you didn’t expect to. Reading between the lines, it could be that as many as 40% of you will take mortgage holidays before the COVID-19 pandemic is over.
We had a lot of responses to this one, with many of you worried about your credit history, and how taking a mortgage holiday will affect your ability to acquire lending for future buy-to-lets.
Another common theme during our Property Pow Wows (conducted with landlords and other property professionals via Zoom), is that many of you might get tripped up here if you apply for a mortgage holiday, only to find out you don’t have the correct mortgage (a BTL mortgage).
This could be for a number of reasons, such as your lender not being aware you were letting the property out, or that you were now using the property as a short-term let. Not everyone’s aware they have to let their mortgage provider know of changes like this – so it’s a good idea to check.
NOTE: We’ve also spoken to three or four mortgage brokers now who have advised their investor clients not to take holidays as they are fairly sure it will have a negative impact on remortgage applications with some (maybe not all) lenders for the next 12 months.
Q4. Have you been satisfied with your letting agency’s response to COVID-19?
The response to this question has been overwhelmingly positive, with a grand total of 92% of you feeling happy with your letting agent during the COVID-19 lockdown. This is a testament to all those hard-working letter agents out there who are doing a stellar job.
It’s also a testament to how well prepared the letting industry is as a whole. They’ve always been good at embracing new technology and problem solving to ensure all the logistics of property management are taken care of.
Let’s face it; letting agents have had a lot to handle recently. Having to relocate offices and staff, conducting inspections, dealing with the logistics of move-ins and move-outs, not to mention ensuring tenants still get essential work carried out.
We’ve heard stories about them spraying keys with disinfectant and then watching from a safe distance as new tenants pick them up. One agent even arranged to have ‘thank you’ hampers sent to a large number of NHS and essential workers during lockdown.
Letting agents aren’t seen as key workers but, in this time, they’re qualities have come shining through and they have, in their own way, shown hero like characteristics! With most following Government advice as per the SAL website.
Q5. Have you had difficulties instructing urgent repairs and safety certs during the lockdown?
Another very positive response. Most of you hadn’t run into any problems instructing urgent repairs and getting safety certifications carried out during lockdown.
Of course, it goes without saying that we’re all taking the appropriate measures and only carrying out urgent or essential work, such as if a tenant has a broken boiler with no access to hot water, or other necessities.
There has been a change in regulation in response to the lockdown, allowing landlord gas safety records to slip out of date a little if a tenant is self-isolating with COVID symptoms. This is a welcome measure to ensure everyone stays safe during this uncertain time.
Q6. In terms of your tenant’s activities, have you had any of the following happen?
This question was a real mixed bag. Even during COVID-19 and things not quite business-as-usual, the letting industry still has a lot to deal with. Just over a quarter of you experienced tenancies being unexpectedly terminated.
A lot of this could be down to students who are no longer able to attend university, returning swiftly to their families elsewhere in the country or even overseas before lockdown properly kicked in.
Which may explain why almost 13% of you saw tenants vacating properties and leaving their belongings behind. On the other hand, some may have been too late to leave the country and have had to unexpectedly extend their tenancies – reported by a further 13.2% of you.
Not to mention, 21.4% of you saw new tenancies started. The popularity of virtual viewings has increased exponentially, with properties being let just from videos alone; something that would never have occurred prior to lockdown. These are very interesting times.
Q7. Would you consider applying for the Scottish Government’s interest free loan available to landlords who have suffered a loss of income due to COVID-19?
We all know that debt eventually has to be repaid, and just over half of you have no intention of applying for an interest free loan offered by the government. Which is not altogether unsurprising.
Just under 30% of you were undecided, and we got a lot of responses that you may need to consider this as a viable option if it was your only choice. Overall, we’re getting the impression that most of you aren’t too keen on getting into any further debt at this juncture.
We don’t blame you.
Q8. If you were thinking about buying or selling property before the lockdown how has COVID-19 changed your plans?
Just under half of you have changed your plans, in some way, due to the impact of COVID-19.
Now, that’s not necessarily a bad thing. At least a few of you responded by telling us you’re now planning to buy an investment property due to opportunities that are now presenting themselves.
Some of you may be looking to sell, in order to free up some equity for a whole range of reasons; such as having more funds to put into your businesses.
And some of you may still be wondering what the next best step to take is and what plans to make next!
Which brings us to our final point…
No-one can predict what happens next… but you’ve had a go
We know you can’t accurately predict the future, but over half of the landlords surveyed said they wish they had a crystal ball to do just that! Which is surprising, as our crystal ball thought it’d be 100%, but nevermind…
Both in the typed survey responses, and in our ‘Property Pow Wows’, we’ve seen a lot of landlords mentioning that they’re expecting to see a lot of AirBnBs/short-term lets exiting the market, either by being sold or ‘flipped’ to become long-term lets.
The other option is that landlords might just hold out for an extended void period until things return to normality and the impact of COVID-19 reduces.
Most landlords who wanted to weigh in are predicting a short-term slump, but a good bounce back in property prices – with a few also chiming in that we’ll see increased rental demand over the next few months, rather than people buying homes.
The most common theme throughout is that cities such as Edinburgh and Glasgow in particular have proven their resilience over the years, and won’t be affected by the impact of COVID-19 in the long-term. Rents may come down in general, just due to there being more options out there.
TIP: We’ve put together our own property forecast recently on our blog, where we’ve gone into far more detail on what we’re expecting to happen in the fallout from COVID-19 and the current lockdown.
One last thing…
However you’ve been affected by the impact of COVID-19, know that you’re not alone. Despite this, what we’ve seen with regards to the sense of community, and how people (tenants, landlords, estate agents) are working together shows us a light at the end of the tunnel.
Looking for more information on the impact of COVID-19 as a buyer or seller? We recommend picking up the phone and speaking to an expert who can give you some advice on your next steps – even if that’s just preparing for when things return to something close to normality.
Most of all, it’s important to try and stay positive. We’re now openly chatting to landlords more than ever in our regular ‘Property Pow Wows’, and listening to what you have to say – and we’re also here to give you advice on anything property-related.
How are you feeling the impact of COVID-19?
If you’re looking to get some advice regarding property right now (or in the future), please don’t hesitate to get in touch.
And, most importantly of all – stay home, and stay safe! We’ll get through this together.
Written by Chris Wood, MD & Founder of Portolio
Get in touch on 07812 164 842 or email [email protected]
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