Tenants are ‘sitting tight’ and not moving until Covid is over

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Tenants are increasingly looking for homes they can move into at the end of the year rather than next month, as many delay moving during the pandemic, according to Barrows and Forrester.

The Birmingham-based lettings agent reports that the usual urgency to secure a property is taking a back seat while lockdown restrictions remain.

It found 38% of all rental properties listed as available within 12 months have already seen a let agreed on them, while tenant demand for rental homes that are immediately available is far lower, with just 24% of properties having had a let agreed.

Barrows and Forrester analysed nearly 50,000 listings in the UK’s major cities, looking at tenant demand based on the ratio of properties already let.

Results show that the current trend is prominent across all but three of the 23 major cities, with just Belfast, Bournemouth and Aberdeen seeing stronger demand for more immediately available rental properties.

In Swansea, demand for immediate properties stands at 11% while those available in 12 months is 33%, while in Plymouth it’s 27% and 60% respectively.

MD James Forrester (pictured) says many tenants are in doubt over their current financial situation.

He explains: “As a result, many are wary about entering into lengthy tenancy agreements across our major cities when they may be able to secure a more affordable option in the surrounding areas.

“This has caused a major shift in rental market trends, with many choosing to sit tight and plan for life after Covid.

“This is a stark contrast to traditional market speeds where you could quite literally blink and miss a newly listed rental property within hours of it being listed because demand was so high.”

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Taken to Court by no win no fee solicitor?

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My tenant complained of mould, but would not let me or my workers into the property. He then said he had decorated (he hadn’t) and no more mention of mould.

He was clearly causing this by various things he was doing including a tumble dryer with no outlet and a paraffin heater.

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EXCLUSIVE: Proportion of landlords refusing face-to-face viewings jumps by 20%

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The proportion of landlords not prepared to do face-to-face viewings with tenants has increased from 43% at the start of the second lockdown to 63.1% now, our latest poll of over 1,800 landlords has revealed.

This means that fewer than 37% of landlords are now happy to meet tenants face-to-face and confirms that worries over the rapid spread of the new-variant Covid strain is beginning to change attitudes within the private rental market.

During the first poll some of those voting registered their continuing scepticism about the dangers of Covid, with one respondent asking why other landlords were afraid of a ‘cold and a bit of flu’.

The significant shift in mood among landlords about safety during viewings has taken place during relative short period – it is only 12 weeks since the start of the second lockdown in early November.

Despite media headlines about individual cases of rule flouting, government information gatherers at the Office for National Statistics says compliance remains high.

High compliance

Some 90% of those it canvassed said they always or often handwashing after returning home, 96% use face covering, and 93% avoided physical contact when outside their home.

“This week, more people are telling us that they are staying at home compared with previous weeks, and fewer of us are meeting up with family and friends outside home,” says Tim Vizard, Principal Research Officer at the ONS (pictured).

Accompanied viewings are still allowed under the current lockdown regulations but landlords and potential tenants must observe social distancing, wear face masks and initial viewings should be done virtually, with only those serious about renting a property being shown around in person by a landlord or letting agent.

Read how landlords can protect themselves from Covid.

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We rented a property to 2 friends of ours who were in dire straits?

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We have rented a property to 2 friends of ours who were in dire straits. They partially renovated a house we own, and moved in before it was finished. There are electrics. Doors and a bannister which needs finishing.

They have 3 children but asked to move in early.

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EICR report – fail (C2) smoke alarms expired?

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A recent EICR report has been returned with a FAIL on a C2, where the mains powered smoke detectors are 10 years old and classed as out of date.

All are working correctly with no faults. Where does it state in regulations that this is a FAIL and not an C3 recommended to replace?

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Life for commercial landlords is going to go through a sea change…

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Life is tough from commercial landlords at present, but there are things they can do to improve their chances as we enter a New Year, and still further Covid restrictions.

Covid has changed the dynamics of letting commercial property, especially if its on the high street or offices. It’s only in certain retail park locations and warehousing / distribution centres where some commercial landlords have seen booming demand.

Home deliveries and Internet sales have benefited these asset classes, but home working and the continued decline of an already suffering high street have, in combination, put pressure on town centres, transport links and landlords holding these kinds of investments.

What can landlords do to help themselves?

Businesses only survive and thrive if they are comprehensively meeting their customers’ needs and demands; their needs must be satisfied if property owners are themselves to benefit, so it’s accurately identifying and providing for these needs that counts.

The much touted shift to permanent home working, once we get through the worst of this pandemic, is almost certainly exaggerated, but there will undoubtedly be a shift, possibly to a hybrid style of home / office working. It doesn’t take the prophesising talent of a Nostradamus to see that there will eventually be a compromise: creative work involves team working, so working people will always need to come together in offices.

Likewise, not everyone wants to shop on the internet. People like to browse, to try on clothes and to shop in nice places where they can eat and drink coffee and be entertained. The high street is suffering but it’s far from dead. We may well see a concentration of activity in certain cities and towns that can adapt, while other town centres may have to move away from pure retail and office activity.

Landlords cannot be too complacent; they need to accept that in most cases it’s no longer a case of providing a square footage of space that simply brings in a rental income stream ad infinitum. It needs to be worked at, first to identify a need, and secondly to provide what is needed given the advantages and the constraints of location. Marketing is far more than selling a product, it’s about doing just those things and then effectively promoting the asset to likely occupiers.

When the dynamics of the market change we need to change our mindset with them. We are likely to be faced with continual and accelerating change of one sort or another into the future. As we face this virus, and the technology changes on the way, the way we live, work and play will not be the same again.

Not only will landlords need to reassess what they are offering to the market, they will need to re-think the way that they manage it, and that may mean taking on more risk and more work. Letting and forgetting has been the norm with commercial property in the past. With a full repairing and insuring lease landlords have had the luxury of risk-free clear returns over very long lease periods, 15, 20 and even 25 year leases were the norm in the past. Those days have gone for most locations.

After this latest pandemic episode, many retail tenants are demanding risk sharing in the form of turnover rents, rents tied to the profitability of a store or other business. This arrangement involves landlords in quite a bit of extra management and accounting work, and it also requires a good degree of trust between landlords and tenants, if the arrangement is to be successful.

After the Covid lockdowns, premises will need to be virus free, safe and secure. Those landlords who are agile enough to provide this level of safety will reap the benefit. Whereas office space pre-Covid was moving increasingly to open plan and shared work-stations, Covid safety requires individual office work spaces, possibly even a move back to single offices, and really good ventilation systems.

Internet connectivity and gigabit broadband with advanced internet, national and international communications devices goes without saying, these will be vital business tools of the future. The “work-from-anywhere” culture is upon us and is not going away, but work teams will still need a base to come together and communicate face to face. Studies have shown that creativity comes from co-mingling and it occurs randomly, it’s unlikely to be at its most effective over Zoom.

Offices are already being adapted with radical changes to space, taking out desks and providing sitting and lounge spaces, collaboration zones, coffee areas and even roof top garden and exercise space. First second and their floor offices, and increased stair access, may become premium office space as staff avoid using lifts.

Retail store space likewise will need a total re-think. Spacing of walkways and displays, fitting rooms, toilets and refreshments areas will all need to be made safe. And as with offices this will result in the need for more space, not less. As with offices, all these areas will need highly adequate ventilation. Simple extractor fans will no longer prove adequate when full flow floor to ceiling systems are available.

Property owners will need to be proactive in marketing their space, acting like business owners who are selling a product to their customers, adopting a new mindset with the sole aim of ‘winning’ tenants.

Future tenants may well come with their own fitting out, technology and design preferences. They will want lease lengths shortening, and there could be a continual need for change and adaptability. But for those landlords willing to provide this, the rewards will be there.

Landlords of the future will have to be more proactive and attentive, and to work harder to gain that competitive edge over their competitors; it will mean treating tenants as paying customers whose needs have to be satisfied in order to keep the space occupied and the rents coming in.

For a long time, and unlike most businesses, commercial property investment has been a landlord’s market, a take it or leave it “sit back and let the rents roll in” business which in many cases has led to complacency. It looks like we’re in for big changes in the future.

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Breathing Space for tenants?

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This needs a broader audience for sure. The stand out ‘features’ of this draft legislation are that it doesn’t include secured debt (well of course it wouldn’t) and they’re obviously expecting the mental health orders to go on for lengthy periods (which they quite easily could) as the legislation allows for review…every FIVE years!

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Stampede of landlords setting up limited companies during 2020

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Half of all buy-to-let property purchases are now bought through a limited company as increasing numbers of landlords seek to avoid paying the mounting tax bills levied on those who buy as individuals.

Last year 41,700 new buy-to-let limited companies were formed, an increase of 23% on 2019, according to research by estate agency Hamptons.

“We estimate that around half of all rental properties bought today are being put into a company, up from close to one-in-five during 2016, says Aneisha Beveridge, its research chief.

It is no co-incidence that the ramping up in limited company registrations by landlords has accelerated in tandem with two key tax increases.

These are the ‘Section 24’ changes that, since being introduced in 2017, have gradually reduced the amount of income tax relief landlords receive for residential property mortgage interest costs, which are now restricted to the basic rate of tax. 

Stamp duty

Also, since April 1^st, 2016 landlords have paid an additional 3% stamp duty on purchases of buy-to-let properties, although the tax also covers second and holiday homes.

This has had a predictable result; more limited companies have been set up by landlords over the past four years than over the past 50 years.

At the end of last year some 228,743 buy-to-let companies were registered at Companies House. This is a record, making buy-to-let firms the second most common type of new company after online shopping firms.

The trend is most obvious in London and the South of England, where properties are most expensive and therefore require mortgages – accounting for half of all buy-toi-0let limited company registrations.

“Despite growth of the private rented sector slowing in recent years, an increasing proportion of buy-to-let purchases are now being held in limited companies,” says Beveridge (pictured).

“While most of this growth has been driven by larger landlords, smaller landlords, particularly those who are higher rate taxpayers, have also reaped the tax saving benefits from incorporating.”

Read more news about limited companies.
More information on tax and limited companies.

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41,700 buy-to-let Limited companies formed in 2020

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Research by Hamptons Countrywide has revealed that 41,700 buy-to-let Limited Companies were formed last year, which is a new record. In fact, the only category of Limited Company formations to beat this number was online shopping stores.

Property118 has yet to check and confirm these numbers

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New housing minister appointed following predecessor’s shock resignation

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Landlords have complained for many years that incoming housing ministers have little or, usually, no experience of the property market.

But not so with latest arrival Eddie Hughes. Not only does he claim a lifelong desire to be a housing minister, but he has a property background including time spent in construction and a long-term membership of the Chartered Institute of Building.

More importantly for landlords, Hughes has been a parliamentary private secretary (PPS) at the Ministry of Housing, Communities and Local Government since June 2018, and is also a government whip.

A PPS is an unpaid position that MPs who are considered ministerial material can be appointed to and Hughes has spent the past two years helping Christopher Pincher – who had no experience of property before arriving at his job last year – navigate the intricacies of the sector, often seen at his side at parliamentary committee hearings.

Labour family

Hughes come from a colourful and largely Labour family and younger brother Des is a Labour councillor in Birmingham. His father Tommy nearly disowned him when Eddie turned blue – he told the Birmingham Mail last year.

52-year-old Hughes, who is MP for Walsall North, replaces Kelly Tolhurst (pictured, below) as Parliamentary Under Secretary for Rough Sleeping and Housing.

She tended her resignation to the Prime Minister over the weekend, saying that: “With great sadness I’ve decided to stand down from Government following some very sad news to care for and spend time with my family.

“It’s been a huge honour to serve our country. I’m proud to support our PM and government as we deliver for the British people and recover from Covid.”

Tolhurst was in post for just four months and only occasionally ventured from her rough sleeping brief into wider housing sector issues including, recently, answering parliamentary questions on the evictions ban.

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