Everything changed on the 16th March 2020, a date that will be forever famous for all the wrong reasons, when our first lockdown came in. The country was in shock, but the property market showed how resilient it was.
One positive was that the property market was able to reopen earlier than some other industries on 13th May. But landlords had to adapt quickly and learn to communicate with their tenants more than ever before.
During lockdown, I was inundated with calls from both landlords and tenants looking for advice on non- payment of rent. As tough as it was, I heard some incredible stories of landlords going above and beyond to help their tenants who had been affected by COVID and subsequently lost jobs or been furloughed.
I saw some great examples of both parties working together but, of course, there were also some tenants taking advantage of the situation.
The Government announced that lenders should be given three-month mortgage holidays, which in fact were deferrals and they encouraged landlords to pass that onto their tenants.
Then of course there was the evictions ban. Courts were put on hold and notice periods extended to six months to prevent the mass threat of homelessness.
Unfortunately, this has had devastating consequences for landlords, particularly those who had cases pre-COVID, as many of these landlords have still not managed to evict their tenants. Of course, it was, and still is, important to help tenants who have lost their job, but so many landlords are struggling too.
We have numerous landlords at Landlord Action who now who have more than one year’s rent arrears, and very little chance of recovering it. The courts are due to re-open in the middle of January but now with the introduction of Tier 4, who knows when this could be extended to.
Universal Credit has hit over 2.5 million claimants, meaning more landlords have tenants in receipt of housing benefit. Frustratingly, tenants are still being forced to wait five weeks for their first payment and are unable to set up direct payments to landlords. This totally baffles me as it puts all parties under financial strain from the outset.
In Wales, tenants can apply for the Welsh Government Tenancy Saver Loan Scheme, which enables tenants to apply for loans. These are paid directly to landlords and agents, which can be repaid for a period of up to five years. This is a great way to sustain tenancies and avoid evictions but has not been introduced in England!
We were always going to see the commercial property sector hit worse than the residential market. Working from home means thousands of offices are vacant and many are now considering whether they need that space in the future or whether their companies have adapted to a new remote way of working.
That is why, as of 8 October, British Land collected 69% of rents it was owed for the third quarter, and even less in the previous quarter.
As we move into 2021, this could present opportunities for landlords and developers buying commercial properties, looking for change of use to residential housing in 2021 under permitted development reforms. The high street in many areas will look different in the future.
I also believe a lot more landlords will consider the Social Housing market, tying up longer-term schemes with providers. Councils will now have many landlords approaching them to do deals on three or five year lets so that they have the security of a council being their tenant, rather than an individual.
Goodbye Section 21
Section 21 is definitely going and I believe it will be abolished in the next twelve months, COVID and the ongoing crisis will accelerate this, especially now that a section 21 notice period is six months which dilutes its powers.
Read this report Landlord Action has participated in called – BEYOND SECTION 21. I believe there could be as many as 150,000 claims issued in the courts in 2021.
When Rishi Sunak made the announcement of the Stamp Duty Concession until the 31st March 2021, which we know now will not be extended, we saw a frenzy of activity, in October alone we saw 97,500 house purchase loans approved. While there are over 140,000 more people in the process of buying a new home now than this time last year
But The Guild of Property Professionals carried out a survey to 1,000 buyers last week and 31% said they would ditch their potential purchase if completion takes them beyond 31 March, when the holiday is due to end, so we could be in for a tsunami of fall-throughs.
Upon speaking to our mortgage broker at Total Landlord Mortgages, Daniel Lee (pictured), mortgage applications are taking longer then ever before, conveyancers working remotely are much slower and lenders are changing lending criteria daily.
Other considerations for landlords next year will be Brexit and how this impacts landlords’ requirement to check their tenants “right to rent” and immigration status. Currently, EU citizens are considered in the same way as UK citizens but this could change after Brexit.
Finally, landlords await Chancellor Rishi Sunak’s Spring Budget which it is thought could bring a potential hike to capital gains tax. If this goes ahead, we could see a flurry of landlords trying to sell up before it comes in, which could drive prices down.
But, of course, landlords who were thinking of selling, but cannot sell in time, will hold on to their properties. There has never been a more important time for landlords to seek specialist tax advice and get their tax planning in place.
There will be opportunities for landlords next year without a doubt but now landlords must focus on being compliant and taking good care of their properties and their tenants.
From all of us at Landlord Zone, we wish you a merry Christmas and a Happy new year and see you in 2021