What Might Be The Long-Term Effects of Coronavirus on the Lettings Industry?
It is safe to say that the Coronavirus pandemic of 2020 will have a long lasting impact on all aspects of our lives. As we move forwards, we must learn from the experiences we have shared and use that as a basis for recovering and rebuilding. This is as true of the rental sector as it is of any other area, but what might be the long-term effects of Coronavirus on the lettings industry?
As previously discussed on this blog, social distancing rules and shielding have led to many landlords and letting agents not being able to access their properties for repairs or mandatory checks. Moving home has also become more difficult, with face-to-face viewings not being possible due to the lock down. But how will the industry shift as we move forward, once the restrictions finally ease? Here are some potential long-term effects of Coronavirus on the lettings industry.
More Lettings Competition
It is possible that many in the short-term lettings sector, who have seen the tourist trade wiped out, might move into the residential long-term lettings game. Even as the country opens up again, domestic holidaymakers may be wary to flock to popular tourist traps and the number of overseas visitors is also likely to take a long time to return to something resembling normal. This could see AirBnB owners look to rent out properties to tenants instead in order to bring in income.
There might also be a number of Homes of Multiple Occupation (HMOs) coming up for rent in university towns, as landlords look to make up for the lack of students. With more properties coming onto the long-term lettings market, the likely result of this increased supply is a dip in rent levels all round. How long the effects last depends on how long it takes the market to stabilise and how long lockdown restrictions last.
With lockdown came a hit to many people’s finances. Self-employed people had to wait months for government support, those on zero-hour contracts had little work coming in, many on furlough found themselves getting by on 20% less in their pay packets, while some lost their jobs completely. As a result, many private renters struggled to pay their rent.
The government put a hold on all eviction proceedings and encouraged landlords to think twice about making new claims against their tenants during the lockdown. This meant that renters could rest assured they wouldn’t end up homeless. However, landlords still need to pay their mortgages so the unpaid rent does need to be recovered at some point. This could put pressure on tenants over the next few months as they attempt to both pay their monthly rent and clear their arrears.
One of the long-term effects of coronavirus on the lettings industry could be an increase in eviction proceedings over the next couple of years.
Introduction of the Lifetime Deposit?
This financial strife could hasten the introduction of the lifetime deposit. The idea that a tenant’s security deposit is simply transferred between the properties that they rent has been mooted in recent months, but if it keeps the rental market moving, now might be the time to bring it into law.
A lifetime deposit means that tenants don’t have to save up for an entirely new security deposit every time they want to move home. It removes an obstacle to quick movement and could help tenants whose incomes have been hit by coronavirus.
More Video Viewings
One of the potential long-term effects of coronavirus on the lettings agency could be the increase in the use of tech. As with many other areas of business, many people have found that it is easier than they thought to work from home, attend meetings virtually and generally use tech to make their working lives easier. The lettings industry has seen a huge rise in the numbers of virtual home viewings taking place over apps such as Zoom and FaceTime.
In the future, it could be that more time-poor tenants than ever will opt to be shown around a property virtually rather than travelling to the location to see it in person. Letting agents need to be ready to provide this service more often in the future.
Make Lettings Easier
For help with many aspects of property management, such as evictions, arrears, dealing with deposits and more, talk to us about outsourcing. We are here to make lettings easier and take the pressure off your shoulders. Use the Contact box below to talk to us today.