Tag: Property News

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2020 house sales to hit peak in September predicts leading agency

2020 house sales to hit peak in September predicts leading agency

The peak of the 2020 sales market is likely to be September instead of the usual early summer – but that depends on many of the lockdown measures being relaxed in time.
 
Knight Frank has calculated that sales transactions peaked in July last year before tailing off towards the end of the year, reflecting the typical seasonal pattern of activity.
 
Tenancies agreed followed a similar pattern, with a more marked decline in the second half of the year.
 
The agency now says that once lockdown measures are relaxed – which will be in May at the earliest, with the current period of restrictions expiring on May 7 – a spurt of sales activity could push this traditional July peak back to August, September or later.
 
“The traditional August exodus is going to disappear this year,” said James Clarke, Knight Frank’s head of London sales. “A lot of the completions that traditionally take place in the summer will be pushed back into the third quarter of 2020,” he adds.
 
For markets like London’s, which has a significant international buyer sector, the delay may be more pronounced if international travel restrictions stay in place even after some domestic lockdown measures end.
 
Meanwhile, outside the capital, where seasonal buying patterns are more entrenched, there is a similar belief that 2020 could prove to be an exception.
 
“If we’re up and trading by the summer then we will have a prolonged market,” says Edward Rook, head of Knight Frank’s Country Department. “However, if this re-opening only happens later in the year, sales are more likely to be deferred until 2021.”
 
Christopher Bailey, head of Knight Frank’s Waterfront department, believes sellers are pragmatic about the current restrictions and are not looking to take property off the market, which bodes well for a busy second half of 2020 as supply is able to match renewed demand.
 
“No one’s in a rush. Low interest rates have taken the pressure off sellers who remain positive about the market and there remains plenty of pent-up demand from buyers” he says.
 
The number of new prospective buyers increased by 14 per cent across the UK in the year to January 2020 compared to the previous 12 months.
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Demand for stamp duty holiday to reignite housing market

Demand for stamp duty holiday to reignite housing market

Rightmove and Knight Frank are today both calling for a series of government incentives to kick-start the market after the Coronavirus lockdown ends – and a stamp duty holiday is the number one suggestion from both companies.
 
In an unusual statement that stretches beyond its usual commentary on prices and demand, Rightmove says an obvious requirement in the immediate future is for the government support for businesses and individuals to remain in place for some time after the lockdown ends “in order to facilitate a quick recovery on many fronts.”
 
Specifically to help buyers and sellers it says a stamp duty holiday, an extension of Help To Buy, and some for of incentive to lenders to offer mortgages would be required. In addition, it says ;enders need to keep offering low deposit mortgages, which would help both the resale and new build sectors of the housing market.
 
“Owners need to be encouraged to move by reducing the costs of moving, and prospective buyers encouraged to buy by reducing the costs of funding their purchase. Given the government’s interventionist strategy to date that might include encouragement for lenders to resume business as usual with their full range of products” suggests Miles Shipside, Rightmove director and housing market analyst.
 
“We need to avoid a repeat of the post-credit-crunch mortgage famine which took from 2008 until the 2013 launch of Help to Buy to bring the mass market back into play with low-deposit mortgages” he adds.
 
Rightmove says lender should also “show forbearance to those in arrears and do not rush to repossess, leading to forced sales.”
 
These would, it fears, lead to reduced property prices, depressed activity and ultimately negative equity for many.
 
The portal says much depends on employment rates, as most buyers need appropriate employment to get a mortgage or to keep up repayments on their existing mortgage. “These are all-important factors influencing market sentiment, and it’s currently hard to predict how that will fluctuate in the months ahead” it admits.
 
Rightmove also says agents have a part to play. “It’s very important that the property industry tries to keep some activity simmering on the back-burner during the lockdown. Then after the end of the full lockdown, it needs a plan to overcome potential buyers’ and sellers’ new-found caution, and to cope with the need to maintain social distancing during visits for marketing, viewing, valuing and surveying” it states.
 
On the PropTech front it says some properties that are for sale or rent have pre-recorded videos available for would-be buyers or tenants to view online.
 
The portal admits it would be highly unusual to buy a property without a physical viewing, but virtual tours help them to work out which ones are worth viewing in person when stay-at-home restrictions are relaxed. Some sellers, guided by their estate agents who are unable to visit, are using mobile phones with their high-quality cameras to record their own videos.
 
To help with this creative approach, it says, the portal has released a new ‘online viewing’ label for agents to highlight properties for sale or to rent that have video tours.
 
“Some innovative agents with good knowledge of the local area are also using live stream video to offer virtual valuations to prospective sellers, in preparation for future marketing” it adds.
 
The portal says that with so few transactions its usual monthly asking price index is effectively redundant but for the record, it reports that the average asking price of the dwindling number of properties coming to market from March 8 to April 11 fell 0.2 per cent to £311,950, with the annual rate of increase from last April being 2.1 per cent.
 
Visits to Rightmove fell by around 40 per cent at the time of the lockdown announcement “but has now started to recover slowly across the last week.”
 
The buoyant start to the year before the lockdown saw the number of sales agreed in the year to March 23 up 11 per cent compared to the same period last year, which was the best start to a year since 2016.
 
It states that most sellers already on the market, and those with a sale already agreed, appear to be continuing with their plans to move once it has been deemed safe enough to do so.
 
Available stock for sale is down only marginally, by 2.6 per cent, “and since the lockdown the level of fall throughs is similar to what we would expect to see in a normal three week period” says Rightmove.
 
Meanwhile Knight Frank makes a similar set of demands on the government.
 
It forecasts that there will be 526,000 fewer home sales in 2020, 350,000 fewer mortgage approvals and overall some £4.4 billion lost in stamp duty accompanied by a loss of at least £1.6 billion in VAT for property-related expenditure not happening during the lockdown.
 
This fall in transaction volumes represents a reduction of 38 per cent on 2019 and is based on the assumption that the current lockdown will remain in place through April and May, with a gradual lifting through June.
 
This fall in activity will be multiplied across the economy. Knight Frank’s estimate is a loss of £7.9 billion in DIY and renovation spend and £395m on removals companies.
 
There will be a wider economic impact, including the loss of employment and general mobility.
 
“Moving house has a clear multiplier effect for the economy” says the agency’s head of London residential research, Tom Bill.
 
“Different-sized businesses in all areas of the economy feel these benefits, which is something the government will take into account when drawing up its post-lockdown stimulus plan.”
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Agency using ‘Covid Clauses’ to keep transactions on course

Agency using ‘Covid Clauses’ to keep transactions on course

Agency using ‘Covid Clauses’ to keep transactions on course
 
An estate agency says it’s using so-called Covid Clauses in contracts to keep transactions on course.
 
Knight Frank says it’s writing ‘Coronavirus Event’ clauses into some contracts to protect buyers and sellers from claims that may arise due to delays during the virus outbreak.
 
Such clauses typically cover delays triggered by parties in the buying process having to self-isolate, disruption to Land Registry searches and removals, as well as the ability to transfer money or sign documents.
 
It says completion dates are typically left flexible and can be reviewed on a rolling basis; the use of relatively distant completion dates means that after an agreed point in the future either side can walk away without penalty.
 
A statement from the firm says: “A number of simultaneous exchanges and completions are also taking place, which minimise the risk of anything untoward taking place between these two stages, which are usually several weeks apart. Furthermore, some buyers are paying reduced exchange deposits of five to seven per cent compared to the usual 10 per cent to minimise the financial risk.”
 
The agency says that in terms of its London activities, one in five property sales underway in London when the pandemic struck have fallen through “meaning the vast majority of buyers and sellers have held their nerve.”
 
“You’d be surprised by how much activity there still is. Buyers and sellers can see what is going on in the world and are most are prepared to wait it out. Some sales are falling through but you’d expect that in a normal market” explains James Clarke, head of London sales at Knight Frank.
 
The agency warns that of course the number of new deals starting from scratch is now small, but the pipeline that existed a month ago was buoyed by the new year ‘release’ of pent up
 
The agency says that although some buyers are requesting price reductions to reflect the added uncertainty created by the pandemic, it is happening in an ad hoc manner.
 
“One buyer asked for a reduction to cover their rent between now and whenever the completion date will be” says James Gubbins from Knight Frank’s Mayfair office. “We worked out the buyers’ daily rent and suggested that instead of the reduction the vendor would cover their rent, showing they were prepared to do everything they could to get the deal completed as soon as possible.”
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Love it or loathe it? Help To Buy to be beefed up after lockdown

Love it or loathe it? Help To Buy to be beefed up after lockdown

The controversial Help To Buy scheme looks likely to be expanded in breadth and extended in duration to help kick-start the housebuilding industry after the lockdown.
 
Currently the scheme helps buyers of new build homes with an equity loan worth 20 per cent of the value of a property; it is due to be phased out between spring 2021 and 2023.
 
It’s been widely reported that the housebuilding industry and its trade bodies have told the government they fear a long-term slowdown will impact on new build volumes; Savills estimates that work has stopped on sites which could accommodate some 200,000 new homes.
 
Meanwhile the former head of the civil service and permanent secretary at the Ministry of Housing Communities and Local Government is also urging Whitehall to beef up Help to Buy.
 
Lord Kerslake told the Housing Today magazine: “I think the challenge is going to be to restore confidence after what has been a big health and economic shock. The sort of things you’ll be looking for is where the government can give confidence to the market, particularly on build for sale, with things like Help to Buy… I think they should at least be putting it on the list of things to be talking about.”
 
Help To Buy has had a mixed reception in the months leading up to the virus outbreak, with critics suggesting that many of its buyers did not need the financial assistance it gave, and that the single biggest effect of the scheme was to inflate the stock market value and profits of many of the country’s largest housebuilders.
 
Supporters say it has helped large numbers of purchasers – the majority of them first time buyers – on to the ladder in better quality homes than they would have bought without the intervention.
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PropTech Today: Ignore 2024, discover 11 home truths happening now

PropTech Today: Ignore 2024, discover 11 home truths happening now

On April 4, EAT published a piece titled: ‘It’s 2024: what will the industry look like, post corona-virus’. To me, this was a completely irrelevant article and there was simply no point in reading it – although well over 3,500 of you have done so.

Okay, let me retract the word ‘completely’ but, at this time, we should be concerned with what the industry will look like on June 24 not 2024. That is what is currently important to each and every one of you. This will be a date where more will be known about the initial short-term impact of this tragic situation we all find ourselves in. 2024 is currently irrelevant.

Let me start with a light-hearted observation. I think we all recognise that the status quo has been blown away. We are seeing, on the one hand, many adopting a much more technological and collaborative aspect of our business and home lives.

Virtual viewings are booming. Virtual house parties, discos, pub quizzes and poker evenings are commonplace. We are learning new ways of communicating and working.

On the other hand, we are all becoming more traditional. I suspect many of you will be baking bread at home, some will be growing seeds.

Others might even be investigating how to make pasta and start drawing again. We have been going out for family walks (when we are not trying to work out how to balance home and work). Doing jigsaw puzzles together – and the occasional game on the Xbox or PlayStation.

What is changing is the middle ground, the status quo. We are upskilling our knowledge of the traditional and the technological. The normal has disappeared. The way we have always done things has changed. We are gaining a sense of control that has been missing for some time.

I wanted, therefore, to use this column to give you some home truths on what I see as happening today. Some you may like. Some you may not. Whichever way, this is a mish-mash of thoughts and feelings I have at the moment and not in any particular order.

1. Technology is forcing us to rethink what we actually ‘do’

There are positives to come out of this situation – I felt this was an excellent and practical example of some changes that are coming into effect right now. Property management is changing, viewings are changing and so are planning meetings and Merger & Acquisition discussions. A positive look at some possible changes.

2. Furloughing is only a short-term positive step

This is where it takes a turn. Furloughing for me is not a positive step. Understand what this really means. Yes, it is putting the role into hibernation. You will get paid for not doing a great deal. Great. But coming out of that hibernation doesn’t mean you spring out of bed. The business landscape will come out of hibernation at different times; it will be sleepy and sluggish for a considerable period.

I can’t help but think there is going to be a huge wake-up call (no pun intended) for a lot of back and front office staff in the next eight weeks. It will not be pretty.

3. What you do during your furlough will define the next steps in your career

If point two comes true, steps you take during your furlough will mean the difference between having a career and not. Some of you will quite rightly be celebrating your paid time off. A well deserved break, no doubt. But, don’t relax. Learn a language, learn a new skill but always have one eye on your career. What will you do to advance it (or change it completely!?).

People will ask you questions like ‘How did you spend your furlough?’ in future interviews. Investors will quiz PropTech people on how they changed their business plans in this period. Having an answer and showing what you did will show leadership and ownership and that you understand the opportunity presented.

4. A new portal is not the answer

Articles I have read this last week are delighting in new portals launching. 2,500 branches are interested in Homesearch, apparently (interested means nothing, by the way) and Openbrix, 18 months in the making, is nearly ready. These are not going to be able to compete for the foreseeable future with Rightmove, Zoopla or OnTheMarket, if ever.

They are missing the point. It isn’t just about pricing. It is about what that pricing gives access to. A £155 per branch subscription model till 2025 will still be expensive, especially with no audience for a considerable period of time. We all know that. Despite the challenges those existing portals all face, they are still going to be the leading marketing channel – whether you like it or not – for some time.

Having said that, these existing portals need also realise the pricing models in place now will not reflect the new normal coronavirus is creating. They need to adapt, and quickly, because of factors I will now discuss…

5. Offices will shut

Yes, home working is tough. Yes, we may want to shut our children in a room and lock the door. Yes, we may want to work in our pyjamas. Yes, we may miss our co-workers. But we are in control. We have flexibility. We have time. Most will realise the benefits of working with more flexibility.

High streets will never be the same again as agents finally realise there is a better way (and they have an excuse to work differently).

6. Brokers and self-employed agents will become the norm

With inevitable layoffs, these models will quickly become more normal and accepted. Consumers will want to work with individuals and won’t think twice because of what has just happened. Service will become the absolute essential aspect of any home transaction. Purchases will be a far more personal experience between the buyer, vendor and ‘agent’.

7. Online agents and iBuyers will struggle

I might suggest there will be a short-term blip of possible survival here for these models. People will panic and want to shift quickly or lockdown will mean they realise now that their home is not fit for purpose. They will realise (like baking bread and making pasta) they can self-serve and want to try. They will also be craving for the certainty that an iBuyer model gives them.

This will be shortlived as they will firstly want human-to-human interaction and feel reassured about decisions being made. iBuyers will not be operating at this time. The algorithms used to predict price viability will simply not be built with pandemics in mind. They might, however, be ready for the next one…End of story.

8. Management should be showing leadership

This is the time where you will see whether there is true leadership in your organisations. Firstly, they should have been decisive, transparent and guided you through the first process of what is a difficult situation. Now, they should be sitting back and thinking. If we started again, how would we build the best ‘estate agency’.

There has been no better time for people to take their brains out of their everyday business operations and reflect. How is this going to change the organisation? Are our fees reasonable or do we need to change how it all works? How are we going to look after this has all settled down?

Estate agents should no longer be carbon copies of each other. Like political parties, they need to be clear of what they offer and why. They need to share their values and why people should work with them.

9. What is the purpose of membership organisations now?

As a founding director of the UK PropTech Association, I know this is something we have taken seriously ourselves. What is the purpose of the association? What is our role now? Many of you pay membership fees to these organisations to help you. What are they doing for you now? It is going to impact them as much as it will be impacting you. Already some are starting to show their true colours, perhaps – read this about ARLA.

At the UKPA, we realised this is the time the property industry needs us most as digital transformation has been pushed from a 10-year process to a 10-week process! The question you need to ask your associations is what their relevance is now? How are they going to help you and what guidance can they give?

10.  Conferences will simply not happen in 2020

ARLA has made decisions as referenced above – it will be a slow car crash of a PR disaster for many conferences if they continue this way. We have to realise that there will not be any conferences this year.

If they do go ahead, by a small miracle that we come out of this okay and are not 6ft under, I might suggest the value proposition is no longer the same. Meetings will be cautious, numbers will be down and so the opportunities for being an attendee or exhibitor is just not there this year.

11. There is no better time to be a friend to your customers

Aside from all the difficulties we are all going to face, there is no better time to prove that you care. Over the past number of years, you will have helped people to move – whether renting or buying – a process that is the most stressful period of their lives along with death and divorce.

This is no doubt going to be another stressful time for them again. Why don’t you simply see how they are getting on? They will be at home. They might appreciate now, more than ever, a simple call to see how they are. If you are helping out in the community, tell them about it, see if they want to help to.

Above all else, this is a time to come together. A time to reflect, realise things won’t be the same and to create a new normal that, while it might be tricky for a period, will benefit you in the long-term. Therefore, this isn’t about 2024 at all. Quite the opposite. Lets focus on June 24 first and make sure we all get there.

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How will the economy survive the current crisis?

There is no doubt that the current crisis, is one of the greatest tests our economy has faced in decades. There are without doubt, many small to medium sized businesses that will suffer greatly, despite the drastic steps taken by the chancellor to lessen the blow. Personally, I feel that rents, rates & interest should have been suspended during this period, to minimise the damage of this terrible situation.

However, moving forward, the question we may all be asking ourselves is, how will the economy cope with this? What will happen to the property market when it is brought out of deep-freeze? Despite the alarming figures suggested by many media sources, this is not the same as the banking crisis of 2008. The banks are in good shape, borrowers are not in negative equity and there is a very large number of businesses that have been able to continue operating though this crisis, albeit at a skeleton level.  The manner in which the nation exits from lockdown may have serious implications on what happens within the first few weeks, which is of paramount importance.

There are also factors at a greater level that once again, may save this island nation of ours. Whichever side of the fence any of you may have been during the charade that was Brexit, I would hazard a guess that even the most ardent of remainers must now be doing their sums and breathing sighs of relief (quietly of course) that the prospect of our economy being shackled to the chains of a financial abyss that may well be Europe after this, will be safely independent.

After the financial crisis of 2008, money poured in to the London market from countries outside of the EU because were WERE NOT part of the Euro, indeed, we were a safe haven. Most rising property markets are ‘bottom-up’ markets, that is, property at the bottom rises and pushes prices up throughout the market. The ripples that begin at the bottom in London, work their way upwards and outwards, not only throughout London, but gradually throughout the whole country. However in 2008, this was not the case, it was a ‘top-down’ rising market, investment from the top, raised the prices at the top end of the market in London, which for the first time , worked their way downwards pulling prices upwards. This is without doubt testament to our wonderful currency, the faith in our first class national credit rating.

It is without doubt, that if the forthcoming weeks and months are handled correctly, which I am very confident of, not because of party politics, but due to faith in the fiscal policy of those in charge, that our economy will not just bounce back, it will actually REBOUND.

Therefore, the issue we currently face is to get through the current crisis safely and to use this time to re-connect with our families, to re-connect with that which is most important and also to prepare to re-start our nation and recover, socially, commercially and financially.

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First ‘virus’ survey shows sellers expecting a five-month delay

First 'virus' survey shows sellers expecting a five-month delay

What is thought to be the first survey of sellers since the start of the Coronavirus outbreak suggests that they anticipate a five-month delay to their plans.
 
This means that the usual spring market surge may take place in late summer, assuming restrictions allow something like normal business to resume.
 
A survey conducted for online mortgage firm Trussle by polling organisation Censuswide shows that 49 per cent of those planning to buy decided to stop looking for a new home as a result of the lockdown.
 
However, fewer sellers pulled the plug with just 20 per cent deciding to halt proceedings on the sale of their home.
 
Overall, both would-be buyers and would-be sellers expect to defer their property plans for an average of just over five months.
 
“With the government’s latest plea discouraging buyers from moving house, It’s entirely understandable that people are putting off their housing plans” says Trussle chief executive Ian Larkin.
 
“At a time of financial uncertainty, it’s a good time to think about your personal outgoings. We know that people could save an average of £4,100 per year just by switching their mortgage to a better deal.
 
“During these uncertain times, people are taking steps to protect themselves financially. Reducing mortgage payments, the biggest monthly outgoing most homeowners will face, is a priority for many.”
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How to keep your buy-to-let afloat AND help tenants in the lockdown: From rent cuts to mortgage holidays?

“A Long Time Ago … In a Galaxy Far, Far Away…”
Landlords are eligible for three-month mortgage payment holidays
But should you offer tenants who are working from home a payment holiday?
Does offering a rent holiday place you in breach of your mortgage contract?
What legal documents do you need if you agree a rent holiday?
 
The coronavirus lockdown has caused severe financial strain for millions of people across Britain, prompting unprecedented financial aid packages from the Government for businesses and individuals alike.
 
While mortgage payment holidays of up to three months are being offered to both homeowners and landlords, who may struggle to keep up with repayments during the lockdown, renters have been told they will be able to stay in their homes during lockdown even if they fall behind with payments.
 
Meanwhile, the Government has officially asked landlords ‘to show compassion and to allow tenants who are affected by this to remain in their homes wherever possible’.
 
What does this mean for landlords in practice though? Should you be proactive with tenants and offer them a temporary rent holiday, knowing that they may be suffering?
 
From speaking to landlords and letting agents, This is Money knows that many are actively trying to help their tenants through tough times and willing to do what they can for those whose finances have been sideswiped by coronavirus.
 
On the flipside, how should you react to tenants asking for a rent reduction when you know full well they’re still working full-time from home and your checks when they moved in showed they had a big salary and lots of cash?
 
What should I do if my tenants want a rent reduction?
There’s no right answer to this but everyone agrees that the most important thing to do is talk to tenants to understand why they need a reduction.
 
Steve Harriott, chief executive of the TDS tenancy deposit protection scheme, says: ‘Under the new guidelines tenants are still liable for their rent, however, if they are facing financial hardship there is support out there.
 
‘It’s really important during this unprecedented situation that the lines of communication between renter and landlord are kept open.
 
‘Now is the time to be having an honest and frank conversation about rents and financial concerns, working together to put a rent payment scheme in place.’
 
Angus Stewart of online buy-to-let adviser Property Master argues that in most cases, it will make sense to agree to a rent reduction temporarily.
 
‘If they ask for a rent reduction it would be logical to look favourably on it if they have been a good tenant in the past,’ he advises.
 
‘If you can still afford to cover that loss for a couple of months it is a sensible thing to do as the last thing you want at the moment is an empty property.’
 
Jeni Browne, sales director at buy-to-let specialist adviser Mortgages for Business, says they have been talking to many landlords over the past fortnight and the most frequent approach is to defer rent payment rather than offer tenants a waiver.
 
The view from lenders is along the same lines. Bob Young, chief executive of specialist buy-to-let lender Fleet Mortgages, says many landlords, where possible, are already helping.
 
‘Providing temporary help, especially if they’re good tenants, is likely to be the sensible option for most landlords,’ he adds.
 
Will I be in breach of my mortgage contract?
In ordinary circumstances, it’s possible that allowing your tenants to pay less rent than agreed in their tenancy agreement would breach your contract with your lender. But these are not ordinary circumstances.
 
Young’s view, as a lender, is that you should be fine to agree a temporary rate reduction with your tenant if they require it.
 
Stewart agrees: ‘This is an exceptional situation and it is likely your lender would rather have some revenue from you than none. In these difficult times it is hard to see a lender wanting to enforce any breach of contract against you if you have explained the situation and are seeking to make some sort of payment.’
 
David Cox, chief executive of ARLA Propertymark, suggests where a rent reduction is essential, landlords, tenants and letting agents should again undertake the affordability check on the tenants’ finances that happens during the initial referencing stage.
 
‘It’s important to understand what tenants could afford on any reduced or furloughed income,’ he explains.
 
‘It would also need to be made clear whether this is a temporary rent reduction or a deferral.
 
‘If it’s a deferral, a payment plan will need to be set up to ensure the tenant clears the rent arrears that are accrued during this period.
 
‘Additionally, landlords and agents will need to be clear about whether they will implement the interest clauses that exist for rent arrears on most tenancy agreements.’
 
Should I offer my tenants a rent reduction, even if they haven’t asked for one?
 
This is Money has heard several examples of landlords generously offering tenants a temporary rent reduction during the coronavirus lockdown – even where tenants don’t request it.
 
Whether you should offer is really down to you and whether you can afford to.
 
Voluntarily getting into mortgage arrears on your buy-to-let is not sensible and will be costly.
 
Chris Sykes, a broker at Private Finance, warns: ‘Some tenants may have interpreted the government mortgage holiday announcement as a way for their landlord to simply pocket three months of rent, when, in fact, those mortgage payments will still need to be paid in the long run.
 
‘Clarifying this offers landlords a way to communicate with their tenants, understand their current position and potentially offer a reduction.’
 
He adds: ‘Every landlord will take their own approach to managing their tenants’ payments.
 
‘It often depends on a landlord’s long-term plan – and how much they value a tenant as part of this.’
 
Stewart also points out that many people won’t need a payment holiday: ‘There are still many people in secure employment and not in need of a rent reduction.
 
‘If your tenants come to you because they have for example lost their job or suffering a serious reduction in income, then you should certainly consider helping them.’
 
Will I need a legal contract in place?
It should be sufficient to have a letter confirming in writing what you have agreed with the tenant, the amount of rent they will pay and the dates the reduction applies, according to Stewart.
 
‘It is very important to have certainty on both sides and a written and signed agreement will help in this regard,’ says Stewart, who advises that landlords also think about agreeing a repayment schedule to make up any rent reductions or rent holidays.
 
‘For the tenant it may well be better off asking for a reduction in rent as less will build up in arrears,’ he says.
 
Young adds: ‘Obviously if you give a rent holiday you are not protecting your income, and you would certainly need something between you and the tenant confirming the arrangement in writing.
 
‘They may need this as evidence to support a claim for state assistance, for example.’
 
How do I apply for a buy-to-let mortgage payment holiday?
As is also the case for homeowners applying for a payment holiday, the sooner you contact your buy-to-let lender the better.
 
Nearly all lenders are reporting a huge surge in customer enquiries and we’re hearing lots of complaints about the time it’s taking to get through on the phone.
 
Depending on your lender, there may be an option to fill in a request online as a first step.
 
Many landlords have portfolios of properties and may need to make multiple applications for leeway from a number of different lenders.
 
It’s possible that your mortgage adviser will be able to assist you with this, though you should expect to pay something for this service.
 
‘It is absolutely essential to agree in advance any repayment holiday with your lender,’ warns Stewart.
 
‘To simply miss payments without that agreement will adversely affect your credit record.’
 
David Hollingworth, of mortgage broker London & Country, adds: ‘Make sure you understand the knock-on effect of a payment holiday.
 
‘Just because there are no payments made doesn’t mean that interest doesn’t continue to accrue.
 
‘At the end of the payment holiday the outstanding balance will be rescheduled over the remaining term, so payments will most likely be higher and more interest payable over the life of the loan.’
 
Will insurance pay out for rent shortfalls related to coronavirus?
There have been reports that insurers aren’t paying out where rent shortfalls due to coronavirus are given as the reason for the claim.
 
Indeed, both Young and Stewart agree that although different insurers and policies will offer different levels of cover, it’s unlikely that your rent arrears will be covered.
 
Check the small print in your policy document carefully.
 
Keep calm and carry on
While the lockdown continues, all the experts agree that finances will need to be flexible but the message to landlords is not to panic.
 
‘Landlords need to be sensible and use their common sense,’ counsels Young. ‘Some tenants will ask for relief and you’ll need to respond accordingly, weighing up both their and your situation.
 
‘This is likely to be a temporary issue and hopefully both landlord and tenant will be able to work through these issues with that in mind.
 
‘From a landlord’s perspective, investing in property has its highs and lows and you need to look at this with a long-term perspective. Indeed, investments of all kinds have their ups and downs, as those heavily invested in the equities market through their pension schemes have also discovered.
 
‘Property still remains a good long-term asset to invest in, despite what is happening in the market right now.’
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Virus crisis will drive more agents to become self-employed – claim

Virus crisis will drive more agents to become self-employed - claim

One of the industry’s highest profile figures has suggested the Coronavirus crisis could trigger many more agents becoming self-employed.

Nicky Stevenson – well known as former managing director of the Property Academy and now on the management team at Fine & Country – says the recent trend of agents moving from corporates to self-employment will not slam into reverse during the crisis.

“I actually believe it will go the other way and that employees, especially those left high and dry, will realise that the security of employment they thought they once had, isn’t quite as secure.

“Generally, people are more motivated by fear than gain, so for many the default is to stick with what’s familiar. On the other side of the COVID-19 pandemic, those that have been left high and dry have less risk and may well believe that now is the opportunity to be their own boss and have more control over their time and earning potential.”

Stevenson – who has previously been an agent at Chestertons, Davis Tate and Keller Williams – says the current necessity of home working will make agents think this is a possible permanent solution to any dissatisfaction they may have had.

“We have already seen a shift in office set ups, with some agents choosing to have one bigger office, rather than various smaller offices in different towns, and sometimes off the high street.

“[Now] the pandemic has forced the industry to embrace certain technology that until now may not have been forefront. I don’t think that ‘normal’ as we know it will be the same again and that every agent will be more tech enabled and experienced in working remotely.

“Now is also a great time to be learning. These ingredients in my opinion, is a great foundation to launch into self-employment” she explains.

Stevenson, who heads up the Fine & Country associate platform, says that business model provides an opportunity for what she calls “experienced, entrepreneurially minded agents” to own their own business without having the overheads of running a high-street or traditional agency.

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Planning for post-lockdown – how to hit the ground running

Planning for post-lockdown - how to hit the ground running

Over the last two weeks we’ve seen the country come to a standstill and the property market effectively put on ice until we are out of lockdown.

The next few months are going to be incredibly difficult for everyone, but it is vital that agents take this time to start planning for the future. Taking the right steps over the next few weeks will be key to ensuring that you’re ready to hit the ground running as soon as some of the current restrictions are lifted.

Unlike after the last recession, current predictions are that the market could recover relatively quickly, but what evidence do we have to support that theory?

Following the General Election in December, pent up demand from people who had been holding back due to Brexit uncertainty, flowed into the marketplace. Could that stand us in good stead for a quick recovery?

Let’s look at the figures…

The data – exchanges

Looking at the change in volumes of Exchanged triggers, we can see that the largest increase in exchanged properties came from the £1 million+ price bracket, with property prices from £400,000 to £1 million not far behind.

Planning for post-lockdown - how to hit the ground running

Both top brackets were experiencing unprecedented double digit growth year-on-year.

In addition, the £200,000 to £400,000 price bracket was also seeing a very healthy growth in exchanges year-on-year.

You could, however, make a strong argument to suggest that a large portion of this effect was not as a result of electoral stability, because it takes so long to complete a property purchase.

Looking at the volume of changes in sales agreed (or SSTC) would perhaps provide an even better view of what happened in the first few weeks of 2020 compared with the prior year.

The data – sales agreed

This chart adds the Sales Agreed (or SSTC) trigger changes to the Exchanged triggers and it certainly makes interesting reading.

Planning for post-lockdown - how to hit the ground running

Firstly, we can clearly see that the changes to SSTC volumes were far more dramatic in all price brackets – roughly double the growth in exchanged triggers.

In properties above £400,000, we were seeing north of 23% growth and the £200,000 to £400,000 bracket, a more than healthy 15% growth in sales agreed.

The only slight downside is that the sales agreed growth rate in properties under £200,000 was comparatively very low.

The high street agent effect

Now let’s look at the market share of high street agents versus hybrids (those without a traditional branch network).

Planning for post-lockdown - how to hit the ground running

The market share of new instructions by price bracket for hybrid agents is shown in this chart.

What we see here is that a hybrid agent’s market share was highest in the poorest price bracket where sales agreed volumes were growing much slower year-on-year than they were in the other three price brackets.

This means that the benefit of the increase in sales seen since the election of 2019 will have been disproportionately felt by the more traditional high street estate agent.

Of the growth in sales that has been experienced to date in the £200,000 to £400,000 selling price bracket, nearly 93% of this will have gone to high street agents.

As we move onto the £400,000 to £1 million selling price bracket, just under 95% of the benefit will have gone to high street agents.

And finally, in the specialised £1 million plus selling price bracket, nearly 99% of the benefit will have flowed through to high street agents!

So what does this mean for the future?

Unfortunately, no-one knows how long lockdown will continue or indeed, exactly what the future of the property market looks like. However, looking at the performance of the market up until mid-March 2020 tells us a few things;

– A high volume of people actively wanted to move
– This was most prevalent for properties in the £200k+ price bracket and even more so at £400k+
– The majority of this activity was taking place with high street agents

Although unfortunately some of these agreed sales will recently have fallen through and many properties will now have been withdrawn from the market, the likelihood is that most of these people will still want to move once they are allowed to.

This should create increased demand on available stock, thereby encouraging more new instructions. The best news is that once these vendors do return to the market, sales should continue to be high value and skewed towards high street agents.

What can you do in the meantime?

It is essential that you maintain contact with those vendors either already on the market, or who have recently withdrawn – both your own and those of your competitors.

Now, more than ever, you must look after your pipeline so that you’re not starting from scratch when the market inevitably picks back up.

This is an opportunity to establish a ‘trusted advisor’ relationship with these vendors, offering them help and guidance when their future move now seems uncertain.

At times like these how you treat your customers and potential customers is paramount. They will need far more hand-holding and direct communication. Some agents are not going to do this and, as such, we are likely to see even more agent switching once we are out of lockdown as vendors become frustrated with a lack of support from their existing agent.

It is vital, though, that what you’re sending is sensitive to the current situation and you don’t just continue to send the same message as you would have done a few weeks or even days ago.

Now that you’re not spending your time on the usual day-to-day tasks use it as an opportunity to really work on the content of your communications and make sure the messages you send highlight the changing requirements of the current marketplace.

Talk about the services you offer that can help vendors restart their property sale as quickly as possible once we’re out of lockdown; share your plans on;

– Virtual tours
– Accompanied remote viewings
– Floor plans
– Live streaming of ‘virtual open houses’
– Online auctions
– ‘Little Black Books’ promoting ‘the best kept secrets’ or houses not openly marketed and see if sellers want to be on it