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COVID19: How has it affected demand for rented property?

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Mortgage Sales Director Moray Hulme discusses how the coronavirus pandemic has impacted demand for rented property and whether it will have a lasting effect on the market.

The COVID19 pandemic has placed many challenges on landlords, both operationally and financially. Surveys show that a significant number have experienced an unwelcome combination of rent problems, unanticipated void issues or difficulty accessing properties for checks and maintenance.

In March, a quarter of landlords said they expected little impact on their business at the end of the crisis and this had risen to 42% by April. This returning confidence is not without good reason; according to a number of industry indices, a strong bounce back in landlord demand has been mirrored by tenant demand following the reopening of the housing market in mid-May.

Although many COVID19 related restrictions have now been relaxed, the pandemic is likely to have a lasting effect on many aspects of our lives. Just under half of renters (49%) hunting for a new home told Rightmove researchers that what they were looking for has been affected by lockdown.

Unsurprisingly, recent restrictions on our access to outdoor space has resulted in renters wanting a bigger garden or at least access to one, as well as a desire to live in a bigger home and closer to parks and green spaces. Pet-friendly homes also made the list of top five wants, as did parking or a garage.

With so many people working from home, it would be logical to expect people to also place greater importance on home office space with fast, reliable broadband. The other side of the same coin is that the necessity to live in close proximity to public transport links and motorways may well reduce.

As well as the immediate impact on renter behaviour, if we take a longer-term view, we can also see why we should be confident that there is still plenty of life left in the private rented sector (PRS). What underpins it – and indeed the buy-to-let market – is demand for rented property.

The latest available Government figures show there are 1.7 million more households than a decade prior, one in five provided by the PRS. This is due to a number of factors including an increase in the number of people living alone, which surpassed 8 million in 2018, a rise of 300,000 compared to the previous year.

Another aspect is an upward trend in the number of people in higher education. Since 1980 this has risen from 19,000 to 2.4 million at the last count, with 485,000 coming from overseas.

So, we must look for innovative ways to meet this need for flexible, quality housing.

Investors aware of increasingly limited land and sustainability issues returning to the political agenda may see opportunities in re-purposing properties. Retail estate has great potential for this.

The rise of online shopping had the high street struggling long before lockdown. Where those who still prefer to purchase in person may be sad to see another store made vacant, others may see properties in prime locations. These could appeal to younger customers and would-be first-time buyers frustrated by a combination of economic uncertainty, the winding down of Government support schemes and a rise in restrictive residential lending criteria.

It’s clear that the measures put in place to protect our health from the virus have placed immense strain on industries at home and abroad. Not for the first time, the sector has shown resilience, however. As we now look forward, you could argue that after being confined to our houses, the need to provide places people are happy to call home may be greater than ever.

Paragon Banking Group PLC.  Registered in England number 2336032.  Registered office 51 Homer Road, Solihull, West Midlands  B91 3QJ.