What’s really happening in the property market and how will this affect landlords?

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While no-one expected a booming market post the Covid lockdown, there are those of us who questioned how much the housing market would suffer during these very strange times.

Currently the most robust housing market forecast seems to be from Hometrack who are predicting property prices to end up being 2-3% up this year, versus many other forecasts who were predicting a 5-16% fall.

There are some falls though, with Aberdeen still suffering year on year as low oil prices are still damaging the local economy. Rents on the other hand are performing very differently up and down the country with some parts of London seeing falls due to excess stock from the short term accommodation market, while other parts of the country are seeing rents moving forward, especially for houses.

For example, the latest Belvoir Index suggests areas such as Tunbridge Wells are seeing increased rents for flats and houses, due to a surge in tenants and as continued low stock levels mean they are forecast to increase on-going.  (Link: )

For landlords, the market very much depends on whether you own flats or houses and your tenants’ ability to pay. As mentioned, houses are in high demand both to purchase and rent, so whether you are looking to cash in or continue letting, landlords can feel fairly confident they can ride out the next 12 – 24 months economic turbulence we are likely to see. However, for flat owners, the market isn’t necessarily as rosy.

The trick moving forward is to make sure your tenants have ‘Covid-safe’ jobs, such as working in food retailing, a key worker and of course our amazing NHS heroes.

Alternatively, plan if your tenant loses their job and see if you can help them get Universal Credit and check what the local housing allowance would be to see if there is a way you can still help them stay in the property.

New tenants

For those that need new tenants, it may be worth checking if your lender/insurance company allows you to let to those on Universal Credit, as although there are issues with the payment system and in the past it has put tenants at a disadvantage, local housing allowances have been raised in some areas and an extra £1,000 has been given to recipients to the end of the tax year in 2021.

If this has been a no for you in the past (don’t forget you can’t discriminate), for the future they could be more likely to pay than someone who may rent privately and is at risk of losing their job.

Best time to buy?

The final question I have seen many ask is when is the best time to buy? Should investors for example hang on until next year now to purchase a home at a discount? The answer to this is, as always, it depends. We are in for one of the strangest recessions on record.

In the last two recessions, prices have pretty much fallen across the board by around 20%. However, in this recession although undoubtedly some could fall by this amount, quite a few might not. The reason being is that unlike many property recessions, we aren’t heading into it this one off the back of huge price rises from a boom.

Also, over half the property owners now own outright with many of the rest having repayment mortgages, so homeowners are unlikely to be under as much threat of losing their home as normal. And as far as job losses are concerned, sadly it’s likely to be those renting who are more at risk than homeowners.

Add to this that not everyone is likely to suffer financially as normally happens in a recession, properties that rarely come up for sale, especially ‘doer uppers’ on popular local roads, may not see any change in price at all if demand is much higher than supply.

However, we aren’t likely to know the extent of the impact of the Covid recession on the property market until the early part of 2021 or even post the end of the stamp duty holiday, so for now unless you are looking at long term investment, it might be better to wait a few months to see what happens next. 

Kate Faulkner is one of the most respected sources of property market data and advice and runs consultancy PropertyChecklists.co.uk

She has also written seven property books, including the Which? Essential Property Guides, and is regularly featured on television and radio as an expert property market commentator.

Her appearances have included BBC Breakfast, Your Money, GMTV, Radio 4 You & Yours and The Big Questions. She has degrees in Economics and Marketing, plus an MBA, and is a member of the Institute of Directors and the Chartered Institute of Marketing.

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