Lockdown legacy: Belvoir reports on the impact of the pandemic on the rental market

Belvoir asked property expert Kate Faulkner to review data from its rental index and quarterly branch surveys both during the pandemic and beyond.

Her subsequent ‘Belvoir pandemic report’ gives a unique insight into market trends during this traumatic period – and beyond.

“Belvoir’s data confirms that offices generally saw a dip in average rents during the pandemic, which has so far been reversed in 2021,” reveals Kate.

“But there is significant regional variation in rents – not just by area, but also whether the let was a flat, house or an HMO. This resulted in different experiences for landlords and tenants.

“During lockdown, rents for flats mostly stayed the same, or fell in value when compared to pre-lockdown. When the market re-opened in May 2020, this impacted on the second half of the year results, and most flat rents increased.

“In contrast, and similar to the sales market, house rents have been consistently increasing in most areas and continued to do so even during the first lockdown.

“Belvoir’s survey analysis shows that although the pandemic has had some impact, overall, this has been much less than would have been expected.

“In fact, the lettings’ market has been incredibly robust for those renting and letting through Belvoir. Unsurprisingly, many tenants stayed put during the pandemic, but coming out of lockdown during the second quarter of 2021, tenant trends appear to be returning to normal.

Rental arrears

“Belvoir offices reference tenants extraordinarily carefully, so rent arrears are few and far between. Pre lockdown, most offices had either zero or no more than three tenants who were more than one week in arrears. This figure jumped during the pandemic, but the trend had already started in Q1 2020 where most offices were dealing with 4-10 tenants in arrears.

“This trend continued through to Q1 2021, but in Q2 2021 we are seeing trends of less than three tenants in arrears, suggesting this was just a ‘blip’ throughout the pandemic.

“The data shows that from 2019 most offices rarely evicted anyone, and these trends changed little during the pandemic.

“There was an increase in Q4 of the percentage of offices reporting zero evictions, but now that evictions are able to proceed more easily, we are seeing a ‘catch up’ in Q2’s data.

“This shows that offices not evicting anyone has fallen from around 80% to just over 60%. But most offices are still only evicting two-three tenants, with a fraction evicting four or more.

Offloading properties

“Interestingly, Belvoir’s data shows an increase in the number of landlords selling properties from Q4 2020 versus pre-pandemic trends, but this is probably due to the lack of landlords selling in the first lockdown.

“During this period, 90% of offices saw fewer than three landlords selling up and the highest proportion of zero sales for nearly 40% of offices.

Comparing Q1 2019 to Q2 2021 when the country re-opened more, the proportions of landlords selling up seems to have returned to normal. Overall, it does not look like Belvoir landlords sold up due to the pandemic.

Pandemic purchasing

“Unsurprisingly, the number of landlords buying properties dipped during the first lockdown. As the market reopens, landlords have strongly returned to the market.

“During the first half of the year few Belvoir offices reported zero landlords buying, most saw 6-10 purchasing new stock, and in the latest quarter, for the first time in a while, a small proportion of offices saw 11+ landlords buying new tenant stock.

“Overall, from a lettings’ metrics basis, it appears that although there were some changes during the pandemic, in the main, long-term trends have returned to normal.

“The pandemic changed how Belvoir offices ran their businesses, with communication, problems doing inspections, and difficulties getting reputable contractors to carry out maintenance work cited as the main problems.

“But offices were quick to respond employing advanced technology with virtual viewings, and teams pulling together to provide as effective a service as possible.

“Despite the government’s efforts to encourage more people to buy, many tenants prefer to rent properties to achieve a much more flexible lifestyle.

“It is clear that the lettings market survived the impact of the pandemic incredibly well, which is good news for investors.”

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