Property expert shares housing advice for landlords and tenants during the coronavirus (COVID-19) crisis

ICAEW interviewed Kate Faulkner, a leading independent property expert, on how coronavirus (COVID-19) will impact the housing market and what support is available for landlords and tenants. Read Kate’s advice below. For all current information on government action on housing, please see official government sources at GOV.UK.

What are the emergency measures being put in place by the government and how will they work? What financial support is available for mortgage holders and renters?

KF: If you are concerned about keeping a roof over your head, there is help available. Lenders cannot repossess your home and landlords cannot evict you. Whatever you do, don’t just stop paying your rent or mortgage. If you want to help yourself and your family through this difficult time, you must communicate that you are struggling. For further information, please see the this article on financial support during the pandemic.

What is the housing market doing so far since the crisis began?

KF: Sales/lettings have dropped and will now not happen over the next three weeks, bar a few imminent moves. Zoopla’s latest survey suggests that housing demand is 40% lower and they predict transactions will fall by an estimated 60% in the next quarter with a further fall during Q3 2020. As a guide there are usually around 1.1/1.2m moves a year, so around 10,000 a month and more than that on the lettings side. It’s a huge challenge for the industry and for consumers.

Does the impact on housing from the coronavirus vary throughout the country, and do we know what’s happening for those with property abroad?

KF: Currently with the lockdown, no. All agents had to shut their offices on 25 March 2020, if they hadn’t already, albeit some can work from home. Here is the information on what is happening abroad. Of course, it depends on different lockdown rules in different countries.

Has there been an impact on rental rates so far? Do you anticipate that there will be, if not currently?

KF: Not yet. There are some indications that the student market is in “trouble” depending on the length of the pandemic. Some have paid until the summer, while others have committed from the summer, but they may not return until January 2021. There are also issues for the short rent market and for those that let to overseas workers – many have had to go home within 24 hours before their country shuts down. Rents may fall, but we also have a huge homelessness issue and problems with people living in B&Bs so it’s likely spare capacity could have a positive impact without affecting rents. Local Housing Allowance rate has also been boosted in some areas, meaning rates for those on Universal Credit may rise.

How are letting agencies affected by the crisis? How do you protect yourself financially as landlord as well as your tenants?

KF: All agents are now to close for the next at least the next two weeks. Letting agents who have a decent stock, eg, 250+ properties should survive as long as tenants can keep paying. However, if the rental income stops, this is an issue for agents and landlords. Evidence suggests most tenants are carrying on paying if they can. Others have just left and not necessarily paid.

The best way for agents/landlords to protect themselves financially is to work out the actual costs, not forgetting tax, and work out how vulnerable the tenants are in relation to health and employment. If the tenant then asks for a reduction, you know how little you can accept without it costing you any money, or if you have a mortgage and can secure a payment break, this may help balance the books even more.

How are rental management companies affected by the crisis? What if you are managing the let property on your own?

KF: The main difficulty currently is keeping in line with the legal requirements when many of them require huge levels of contact with the public, sometimes for a reasonable length of time eg, gas/electric checks. The question comes down to “what’s essential”. However, during the lockdown, no viewings or instructions can take place. Currently the government guidance for tradespeople is:

“Work carried out in people’s homes, for example by tradespeople carrying out repairs and maintenance, can continue, provided that the tradesperson is well and has no symptoms. Again, it will be important to ensure that Public Health England guidelines, including maintaining a two metre distance from any household occupants, are followed to ensure everyone’s safety.”

Based on this, the gas engineer registration body, Gas Safe, for example believes safety checks can still go ahead, but landlords/agents need to act early and use the two month leeway to book an engineer early.

How do you access help if you can’t afford your home? What financial support is available for mortgage holders and renters?

KF: Please see this article on what to do if you can’t afford your home.

For all writing by Kate on this topic, please see her articles.