Signs of post-Covid normalisation in retail and leisure activity

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According to research data released by the Local Data Company (LDC), Britain’s retail and leisure sector is beginning to stabilise, suggesting that the worst of the pandemic impact is over. Their figures show that as vacancy rates rose slightly in the first half of 2021, in the second half this trend was reversed, most noticeably in the leisure sector.

The second half of 2021 saw the first vacancy rates in retail and leisure decline for the first time since the first half of 2018, a sure sign says LDC that the market is stabilising. Over the full year 2021, however, national vacancy rates increased by 0.7%, though this figure is still lower than expected given the lack of activity in the first 3 months, due to the lockdown – see the chart below.

The retail vacancy rate hit a record high in 2021, but peaking in the first half of the year at 15.8%, coming down again in the second half, with a 0.1% decrease. The retail vacancy rate currently sits at 15.7%, a figure that now looks set to decline further as more retail and leisure units are taken off the market, converting to other uses. Businesses are also returning to acquiring new sites.

The leisure sector is showing the most promise, with definite signs of recovery, despite restrictions on hospitality continuing well into 2021. The leisure vacancy rate figure has dropped from 11.3% to 11.0% over 6 months— the largest decrease says LDC since its records began in the first half of 2013.

Expanding chains and independent food and beverage operators are assisting growth, while increasing freedom from Covid, pent up demand from the various lockdowns, national sports activity such as England’s run in the Euros, and the return of office workers later in the year have all contributed to boosting demand in hospitality venues.

Shopping centres, hit hard by the Covid lockdowns and online shopping, previously seeing the greatest increase in vacancies since the onset of the pandemic, saw a reduction in vacancy rates of 0.3%. It brought the shopping centre vacancy rate figure down to 19.1% at the end of 2021.

Out of town and edge of town retail parks are continuing their trend of carrying the lowest vacancy rates of any retail / leisure location type since 2013, seeing a 0.2% decline in vacancy rates in the second half of 2021.

Britain’s High streets continued to prove more stable than other location types. The vacancy rate for high streets fell by 0.1% in the second half of 2021. However, high street vacancy rates were only up 2.3% on H2 2019, compared to increases of 3.2% for retail parks and 4.8% for shopping centres over the same period.

These figures suggest that high streets were not as heavily impacted by Covid as the other location types due to being less exposed to “at-risk” brands and having a higher percentage of independent occupiers who benefited from additional government support throughout the pandemic.

Vacancy rates are not expected to return to pre-pandemic levels yet though, but they are projected to continue to decline further over 2022, due to the continuing redevelopment and repurposing of retail space.

The year 2021 saw a record increase in the amount re-purposing and redevelopment activity, with an increase of 49%, suggesting that the worst of the pandemic-related closures is over and the industry has shifted its focus from survival to recovery, says LDC.

Lucy Stainton, Commercial Director, Local Data Company says:

“This latest analysis is significant because the figures finally point to a reversal of the structural decline we had seen accelerate with the onset of the COVID-19 pandemic. Going into this, the physical retail market had already been plagued by a number of other headwinds such as online and digital adoption, but the coronavirus brought about long periods of restricted trading and this proved insurmountable for many chains across both retail and hospitality.

“Vacancy rates peaked halfway through 2021 as a result of this but, as we come into 2022, these latest statistics are cause for cautious optimism, with the number of empty shops finally coming down as consumers return to high streets and shopping centres.

“Our analysis points towards this trend continuing as the final shakeout from various CVAs and insolvencies is hopefully behind us and independent operators continue to open new sites. With many chains re-looking at their strategy for growth, the independent sector proving buoyant and an unprecedented level of repurposing and redevelopment, we could be seeing the start of a new phase of physical retailing and we will be tracking this very closely.”

Below – Historical vacancy rates by occupier type across GB, 2013-2021 (Source: Local Data Company)

Below – Redevelopment activity across GB, 2015 – 2021 (Source: Local Data Company)

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LATEST: Trade body launches bid to head off rent controls in Wales

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The National Residential Landlords Association (NRLA) has launched an initiative to try and head off expected rent controls in Wales.

Its Shadow Wales White Paper sets out how the trade body believes the Welsh private rented sector could be improved, as well as pointing out the defects in the coalition government’s proposed restrictions to rent rises.

These were revealed in November last year but Welsh landlords are still waiting to hear the details of how rent controls would work. This includes whether they would be a rent ‘cap’ or restrictions on rises bound to inflation, the most common types proposed by campaigners.

“The NRLA has long held the view that rent controls of any kind simply do not work and do not have the intended effect of addressing affordability in the private rented sector,” the NRLA document says.

The rent control proposals are an output of the country’s Labour and nationalist party Plaid Cymru coalition, as both parties are keen on rent controls, although recent media coverage points to both sides not seeing eye-to-eye on how they should be implemented.

Longer notice periods

The coalition has also been instrumental in shaping other even more radical measures including new, longer ASTs and longer notice periods, announced earlier this year.

But the NRLA says its own research shows that only 11 per cent of landlords said they planned to increase the number of properties they let out whilst far more, 37 per cent, plan to cut the number they rent out.

“Our White Paper sets out what must be done in Wales to build a fairer, more inclusive PRS for both tenants and landlords and the damage that outmoded notions of rent control could have on the market,” says Ben Beadle, Chief Executive of the NRLA.

“Ultimately, with affordability and supply issues continuing to dog the Welsh private rented sector, rent controls would exacerbate these ongoing problems and fail to provide a solution fit for the twenty-first century.”

The social sector is already subject to a rent rise cap, which sets out how much social landlords can increase rents each, subject to an annual review, the most recent of which was published recently.

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Landlords urged to help tenants to take in Ukraine refugees as thousands apply

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Huge numbers of tenants are keen to sign up for the Homes for Ukraine scheme, says the Guild of Property Professionals, which has urged them to work closely with landlords.

It says there have been growing numbers of enquiries from tenants who are unsure about the rules, while several lettings agents have asked for guidance about the scheme, which launches today.

Compliance officer Paul Offley explains that if a tenant wants to offer accommodation, they will need to have a spare room available in their property and would also need the landlord’s consent.

“The DLUHC have stated that sponsors will be asked to offer a minimum of six months’ accommodation, which would need to be taken into consideration by both the tenant and the landlord before agreeing to be a host,” says Offley.

This means that a landlord might have a problem if they wanted to end the tenancy at an earlier date, he adds.

The government is currently in the process of providing more detailed guidance, which should be published within the next day or two, according to the Guild.

“This guidance will include information around the status of the arrangement, required accommodation standards and the checks that will be done on the sponsor, as well as the person they will be hosting,” he explains.

“It is important to remember that the sponsor will have to be matched to the person they are hosting.”

While tenants will not be able to charge rent, the government will hand out an optional ‘thank you’ payment of £350 per month to hosts.

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Shadow White Paper for Wales

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Today, in its Shadow Wales White Paper, the National Residential Landlords Association (NRLA) sets the future direction necessary for a fairer, more inclusive PRS in Wales.

The Shadow White Paper, entitled “The Future of Private Renting in Wales”

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LATEST: London council launches own private renters’ union with Generation Rent

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Lewisham Council is working with tenants to launch a dedicated private renters’ union, understood to be the second of its kind in the UK after Southwark set one up during the pandemic.

It wants to give private tenants in the London borough a stronger voice to raise issues and help them access support and advice, and is working with tenants’ advocacy group Generation Rent to find out more about the issues they face by conducting a survey and holding focus groups.

Generation Rent director Alicia Kennedy(pictured) tells LandlordZONE it is organising events that explore private renters’ experience in Lewisham and how they feel they could have a stronger voice in the council.

“As part of this we will encourage participants to consider how they want to engage with Lewisham Council and all options that might improve tenants’ experiences, including support from and engagement with existing groups such as London Renters Union, ACORN and Citizens Advice,” she says.

“We will be sharing the findings of our conversations with private renters in Lewisham and their feedback with Lewisham Council to inform their future decisions.”

The concept has the approval of Shadow Justice Minister Ellie Reeves who flagged it up during a debate this week on housing standards.

Criticised

She told the Commons: “The aim is to provide a link between renters and councils, help the local authority become better informed about the issues that private renters face and what it can do to support them, and help renters to become more knowledgeable about the council services available to them.”

However, the plan has been criticised on social media for trying to undermine current unions such as Acorn and London Renters Union. One Tweet says: “I recommend people join this lovely bunch rather than put themselves at the whims of the same council that leaves so many suffering in poor conditions.”

LandlordZONE has approached Lewisham Council for comment.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: London council launches own private renters’ union with Generation Rent | LandlordZONE.

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Wear and tear or?

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I have just had a tenant move out. My understanding is they should leave a place as they found it.

Immaculate when she got it, but now it’s a dirty tip, belongings everywhere (which I can deal with no problem) looked like it hadn’t been hoovered or cleaned in over a year.

View Full Article: Wear and tear or?

Will you pass energy-efficient improvement costs onto your tenants as higher rent?

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Under proposed regulations, landlords may be required to make changes to their properties to improve their Energy Performance Certificate (EPC) ratings to C or above.

The anticipated deadline to comply with these regulations is 2025 for all new tenancies, and 2028 for all existing tenancies. But making the necessary energy-efficient improvements could be a costly exercise for many landlords, particularly those with older properties.

The landlords we surveyed estimated an average cost of £5,900 to achieve the required EPC rating however, this figure could be significantly underestimated.

Landlords who have already made the necessary improvements to their properties have spent £8,900 on average, but wider market forces such as labour costs and material shortages could push this up even further.

Pass on costs

Of the landlords we spoke to* over half said that they will pass at least some of these costs onto their tenants in a bid to recoup some of the money they will need to spend.

Tenants in London are most likely to see a rise in their rents as a result, with 68% of landlords in London saying they would share at least some of the costs with their tenants.

Whether landlords increase rents straight away or not, nearly a fifth (18%) of landlords expect them to rise as a natural consequence of the new regulations.

Finance options

While passing on some of the costs to tenants may be necessary, finding a cost-effective funding solution, such as bridging finance, might be worthwhile.

This funding could help landlords make the required changes ahead of the deadline, relieving some of the pressure, and could possibly offset the costs that tenants would otherwise see. 

For landlords unaware of the level of works required, what the associated costs will be, or what finance options are available to them, speaking to a professional mortgage broker or lender sooner rather than later could help paint a clearer picture.

Read Shawbrook’s Confronting the EPC Challenge report

*Research Methodology

Shawbrook Bank contracted Opinium to undertake research between 18th and 25th November 2021 to understand landlords’ awareness of the upcoming proposed changes to the Energy Performance Certification (EPC), which will require properties to be rated ‘C’ or above by 2025 in order to begin a new tenancy. A total 1,000 UK landlords were surveyed.

Author: Emma Cox, Managing Director of Real Estate, Shawcross Bank.

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Will helping mean prosecution by Councils?

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Will helping Ukrainian refugees lead to thousands of homeowners and renters being prosecuted by councils for unlicensed HMOs (Like councils prosecuted those who housed the homeless during Covid)?

Thousands of people appear to be being set up for prosecution by uncaring and revenue greedy councils on the back of the UK response to the humanitarian crisis in Ukraine.

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How can landlords make their properties more energy efficient?

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Rising energy prices are at the forefront of a cost-of-living squeeze that will be felt by many in the UK. If you’re a tenant, the rising price cap on energy is out of your control but saving money through energy efficiency is within it.

For landlords, increased energy efficiency will ensure your buy-to-let investments stay within an Energy Performance Certificate (EPC) E rating – the minimum requirement to avoid a £5,000 fine. Lower energy bills also mean happier tenants, which will encourage longer-term occupancy and attract renters in the first place.

With this in mind, we’ve compiled a comprehensive guide on the measures you can take to improve your EPC rating and make your property more energy efficient.

How to make your property more energy efficient

Improve insulation

About a third of all the heat lost, in an uninsulated home, escapes through the walls. If you want to reduce your carbon emissions and keep your tenant’s energy bills low, installing insulation in walls and floors, will make a big impact.

Install draught proofing

This is an incredibly easy way to save energy. You just need to identify and block any gaps that might let cold air in or warm air out. These include gaps between windows/doors and the frames, letterboxes, keyholes, chimneys, loft hatches, and floorboards. Solutions include self-adhesive strips for gaps between windows and doors, brushes for letterboxes or the bottom of front doors, and draught excluders or caps for chimney pots.

Upgrade to an energy-efficient heating system

Is the boiler in your property due an upgrade? Consider going for a more energy-efficient option when the time comes. Electric and biomass boilers all represent better eco-friendly alternatives to traditional gas boilers, while even condenser boilers that use gas or oil generate a lower carbon footprint.

Go double or triple glazed

If you still have single glazing, you should upgrade to double or triple glazing. It helps to minimise energy loss and can reduce condensation and make the property quieter – especially valuable if it’s on a busy road.

A cheaper alternative is secondary glazing, which is quicker and cleaner to install. It’s particularly useful for listed buildings or in conservation areas when you want to keep the external look of your windows unchanged.

Harness the sun

Even though we don’t always get the amount of sunshine we’d like in the UK, we do get enough to generate free hot water via a solar water heating system. Typically, the heat is provided by solar panels fitted to roofs and the system can also be linked to existing boilers or immersion heaters, so that if there are any problems, the conventional heating system can step in.  

Get a smart meter

A smart meter is the next generation of a gas and electricity meter. Instead of estimated billing, a smart meter automatically sends your readings to your energy supplier at least once a month (daily or half-hourly sends are optional) and lets tenants see how much they are spending on their energy usage.

Switch to LED lighting

LED lights are typically more expensive to buy (around £5, compared to £1-£2 for incandescent or halogen bulbs) however the cost savings are far greater in the long run. There is a helpful table by Electrical Counter that compares purchase prices, running prices per year, and the lifespan of each type of bulb. 

Cut your water usage

In a report by the Energy Saving Trust, showers are the biggest water user in the house (25%), followed by toilets (22%). Over 740 billion litres of water are flushed down our toilets annually in the UK, meanwhile heating water is the second-largest source of energy use in the home. Reducing water usage can make a big difference to your property’s energy efficiency. Dual flush cisterns, low flow showerheads and appliances like dishwashers or washing machines with an A+++ energy rating are all ways you can save water and money.

Small energy-saving extras that make a big difference

Saving energy doesn’t just involve home improvements or upgrades, there are smaller habits that you could share with your tenants to incorporate in their ‘every day’, to improve energy efficiency and save money on their bills. These include…

• Keep radiators clear so that heat can circulate properly
• Turn off radiators in rooms that aren’t being used
• Unplug laptops, chargers etc when they’re not being used
• Ensure dishwashers and washing machines are at full capacity when they are used
• Use the eco settings on appliances wherever

In addition to saving money and reducing your carbon footprint, your energy-saving endeavours could also be rewarded by funds and grants. To discover more about these schemes and improving the energy efficiency of your rental property, you can download a full eBook from LRG here.

Author: Michael Cook, Managing Director of National Lettings at Leaders.

Bio: With over 15 years in the property industry, Michael is responsible for both building and managing the Leaders’ Lettings portfolio across the national network of branches.

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Do I pay for boarding-up after police force entry?

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I’ve got a flat that was empty for a few weeks as the tenants went on holiday. A neighbour on the second floor hadn’t seen them for a while…and thought he could smell something from my flat. He contacted the agents who look after the block at about 10:30pm.

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