A round-up of the latest property statistics from Private Finance indicates that the second half of 2020 could be “increasingly difficult” for landlords.
Rents in London are falling dramatically – Zone 2 rents are down 8% alone in asking price since February 2020, according to Rightmove, and have levelled off outside of the capital with a slight increase of 0.6% on July last year across the UK as a whole (Home Let Index).
Whilst the market saw huge demand following the relaxation of lockdown restrictions there is some shocks on the way.
Firstly, there is the ban of evictions ending on the 20 September (following a recent extension by the Government and a new 6 month notice period until 31 March 2021), landlords whose tenants have been unable to pay rent will now have to go through an even lengthier eviction process if necessary, and when you also include the finding of new tenants could see them very much out of pocket.
Moreover, with the furlough scheme ending at the end of October we could see large scale redundancies with the potential for a higher rental void and further evictions. Lastly, with Brexit on the horizon demand could be further effected with less Europeans relocating to UK cities.
Private Finance said all of these factors could lead to increased supply, further depressing rental prices and all creating a ‘winter of discontent’ for landlords, especially in London.
A spokesperson for Private Finance said potential entrants to the market may be put off by the current climate, “The upcoming eviction of tenants en masse in the midst of global pandemic will see a great deal of negative publicity – ultimately we believe this will put off new entrants to the market, even with the potential savings from the Stamp Duty Holiday.
“Mortgage rates are rising and we expect this will be the same for buy-to-let mortgages, again potentially discouraging entrants to the market.
They added that landlords may actively leave the BTL market, “With the housing market going through an unexpected spike in demand and prices up 3.8% this year as of July 2020, we may see landlords sell their investment properties to avoid the potential difficulties moving forward. Whilst there is optimism in the housing market in general, we believe we will see a decrease in demand for BTL products in the coming months.”