Strange and unusual times have been brought about because of the coronavirus crisis.
Just as in practically every other walk of life, those changes have been felt as keenly in the housing market as anywhere else. Here is a brief review of some of the current effects of lockdown.
£82bn of property transactions on hold on due to coronavirus
Sales of some 373,000 homes have been suspended and remain on ice during the current lockdown, tying up transactions worth some £82 billion, says Property Reporter on the 28th of April.
Unsurprisingly, orders to stay at home and maintain social distancing have had an immediate and major impact on the housing market. During the month of March, for example, apparent demand for housing fell by around 70%. Early April saw that trend gradually bottoming out, so that demand had fallen to about 60% of the level recorded before March.
As April progressed, so interest in property transactions continued to revive, so that demand is currently only around 35% lower than at the beginning of March.
Despite these figures, though, the underlying conclusion is that the market is currently on hold rather than in any terminal decline. Few homes have been withdrawn from the market and the majority continue to be offered for sale, with the volume of listings only around 4% lower than at the beginning of March.
Average monthly rents remain almost unchanged in Q1 2020
The past 12 to 18 months have seen average rents across the country remain more or less static. During the first quarter of this year, the average rose just £2 on the levels achieved at the end of 2019 – to £775 a month – according to a report by Landlord Today on the 29th of April.
Citing figures from the Deposit Protection Service (DPS), the article confirmed that the highest levels of rent are, of course, in London – an average of £1,345 a month, the same as at the end of 2019, and equivalent to around 42% of the average Londoner’s income.
The long-term effects of the coronavirus crisis – and a lockdown during which households are encouraged not to move home – remain to be seen. The article reports that some landlords, however, are asking how to claim against a deposit if the tenant leaves without giving notice.
One in seven mortgage borrowers have taken a payment holiday
Landlords have been offered an estimated 1.6 million buy to let mortgage repayment holidays – around one in seven of all monthly repayments owed to lenders – according to Property Wire on the 29th of April.
The offers are made to landlords facing financial difficulties during the current crisis and the so-called payment holiday allows them to defer an agreed number of repayments until a later date, when the missed payments (including interest) become payable.
Giving the reasoning behind government’s encouragement of buy to let mortgage payment holidays, the Financial Conduct Authority (FCA) explains that, for their part, landlords are expected to refrain from pursuing any action against sitting tenants for repossession of their let property. Provisions ensuring the protection of tenants from eviction are incorporated into Section 81 Schedule 29 of the Coronavirus Act 2020.
New app can prove landlords’ gas engineers tried to gain access
Guidance issued by the Ministry of Housing, Communities and Local Government recognises that the need for certain vulnerable tenants to self-isolate means that landlords may be unable to conduct routine health and safety inspections.
The guidance reassures landlords that they will not be unfairly penalised for failing to conduct inspections in those circumstances, especially if they can show that arrangements have been made for them to be made at a later date.
On the 28th of April, Landlord Zone carried an article about a free mobile app, called Gas Tag, which landlords can use as evidence that they attempted to conduct one such critical inspection – for gas safety – but that the tenant had refused entry.