Post lockdown recommendations for landlords
Post lockdown recommendations for landlords
As we continue to live under an extended period of lockdown, we hope you’ve been following our Top Five Tips for Landlords here. But as you read this, we may soon be heading for a gradual relaxation of the lockdown rules mirroring countries like Italy, Spain and Germany.
What do landlords like you need to consider and put into action as we come out of lockdown? Here are our top five predictions and post lockdown recommendations for landlords.
Consider the effects to renters and the rental market
A YouGov poll of over 2,000 UK voters for the Telegraph published 13 April here revealed 84% believe the economy will be harmed for at least a few years by the impact of COVID-19. Whilst many hope for a ‘V-shaped’ economic bounce with a quick return to normality, it is logical to extrapolate that there will be an enduring drop in consumer confidence as people seek to rebuild shattered personal finances or save for any Coronavirus resurgence before widespread vaccination is implemented. This will further impact on already dire employment statistics and therefore the financial stability of many renters.
Investment bank Nomura is predicting that there will be an unemployment rate of eight per cent to June, and that it will rise to 8.5 per cent in the following three months. As a comparison, at its height, unemployment reached 8.1 per cent in 2011 following the 2009 economic crash. We won’t see the true extent of the damage that the Coronavirus has done to the UK jobs market until June when the latest Office for National Statistics employment figures are released.
If the predictions above transpire to a greater or lesser extent, renting will gain in popularity over home ownership but landlords may need to be more circumspect about evaluating new tenants and/or be prepared for some of their tenants getting into financial difficulty that affects their ability to pay rent in full and on time more so than in pre-crisis times.
Don’t delay in marketing your properties
Lockdown has made filling vacant properties extremely difficult as face-to-face property viewings have not been possible and property moves have been actively discouraged by the Government.
However, it’s not been impossible for landlords to adjust and those with the foresight to get ahead have continued to list their rentals on the likes of Rightmove and Zoopla and offering virtual viewings by way of widely available video calling apps.
Letting professionals know that it can normally take up to three months to find good tenants and these times are so very far from normal.
Maintaining social distancing will continue to be the reality until vaccination for COVID-19 is widespread across the population. Finding and trialling a vaccine aside, the time it takes to mass manufacture and roll-out is leading some experts to predict that it could be as late as end-2021 before COVID-19 is comprehensively neutered.
Landlords becoming comfortable and adept at running their own virtual viewings or taking advantage of professional viewing services virtual or otherwise is going to become the new normal in 2020.
Get up to date with safety checks and inspections
Your landlord responsibilities of providing your tenants with a safe, secure and warm home to live in have never been absolved throughout this crisis, although during lockdown the Government did recommended that no periodic property inspections and non-essential repairs were to take place.
However, your repair obligations for essential repairs that relate to the safety and structural fabric of the property remained – even in the case of your tenants self-isolating or being in an ‘at risk’ group. The enforcement of maintaining up-to-date EPCs, gas safety and from 1 July electrical safety certification (already in place for HMOs) may have practically been relaxed during lockdown, but tenants who are living with serious hazards that you have failed to remedy can still be assured of local authority support.
With lockdown ending, any period of grace will no doubt disappear if indeed it ever really existed. It’s important that you get on top of your safety checks and as it’s likely that you’ve not conducted a periodic inspection visit within the last three months that you do so to check on the upkeep of your most valuable asset and to identify any essential repair work not reported by your tenants.
Keep track of arrears repayments
Over the course of the lockdown you may have agreed a temporary reduction in rent payments or even a rent payment holiday with any tenants experiencing financial difficulty due the impact of COVID-19. This will have been on the basis of any arrears being recoverable via an affordable repayment plan. We trust any agreements you’ve brokered have been documented in writing and signed by both parties.
Post lockdown, it will be important for you to keep track of the agreed repayment plans in addition to your usual rent payments. This may be a bit fiddly and time consuming but important to ensure your own profitability or at least to avoid unnecessary losses. Remember, if you’ve taken a repayment holiday against your Buy-To-Let mortgage your costs will increase as any outstanding balances will have been re-scheduled over the remaining term, so payments will be higher and more interest will be payable over the life of the loan.
Be ever mindful of changing legislation
The Coronavirus Act 2020 which commenced on 25 March grants the Government emergency powers to handle the 2020 Coronavirus pandemic. As you are no doubt aware, The Act delays when landlords are able to evict tenants either by extending the notice period that a landlord is required to serve on a tenant to at least three months or, in some cases, creating a three months’ notice requirement where a requirement to give notice does not currently exist.
The clause does not prevent a landlord from serving a notice of intention to possess, nor does it end a tenant’s liability for rental payments. The Act has a two-year time limit that may be shortened or lengthened by six months at ministerial discretion and is additionally subject to parliamentary renewal every six months. This means The Act will be in place until the end of September at the earliest unless it is shortened.
With the impact of COVID-19 causing widespread disruption in the economy and therefore the financial health and stability of many in society, it is not unreasonable to predict that once The Coronavirus Act 2020 is repealed, previously scheduled legislation reform such as changes to Section 21 of the House Act will go-ahead in early 2021.
Post lockdown, it will be arguably more important for you to continue to maintain good, direct relationship with your tenants to encourage adherence to the tenancy agreement including rent payments.
Conclusion – Our post lockdown recommendations for landlords
Once we come out of lockdown and the country gets down to the mammoth task of rebuilding, all the usual best practices and obligations that landlords should adhere to anyway will come back to the fore.
RentiD’s post lockdown recommendations for landlords are:
• Market soon to be vacated properties ASAP taking care to produce high quality listings with good photography, floor plans up-to-date EPCs, gas and electrical safety checks. Consider how best to offer virtual viewings – see our guide here.
• Act to reduce risk through comprehensive tenant referencing and rent insurance or guarantee products with new tenancies. Stay on top of maintenance, repair and particularly safety responsibilities with vacant properties and current tenancies.
• Stay in control of rent payments be they regular or rent payment plans that you’ve agreed during the lockdown.
• Above all else – maintain strong, direct relationships with your tenants. You may previously have used an agent who has subsequently let you down or gone out of business. If you’ve established direct contact there has never been a better opportunity to build and maintain good relationships with your tenants for the long term as well as managing and securely storing all your key documents yourself.
Whilst the prevailing conditions looks challenging for landlords, it should be remembered that as with most other types of investment be that pension funds, equities or even fine wine, a long term perspective needs to taken. We believe property still remains a good long term asset to invest in despite what is happening in the market right now and the uncertainly of what is to follow in a post lockdown world.