Normally I spend my time steeped in UK property market figures, but currently, they are of little use. So far this year all of the UK indices are pointing towards a strong start to the first half of the year, but as we all now know, this is likely to dissipate over the coming months.
Currently I understand that if properties have exchanged, they are pretty much going through and doing so relatively smoothly. I have though seen plenty of online posts and received emails asking whether buyers should pull out if they have offers accepted, but haven’t gone through.
My advice buyers with a pending purchase:
If people can still afford the property that they are buying – and their job/pension/savings are ‘as secure’ as they can be and/or it is the property of their dreams or a move they have to make… then they should still consider going ahead, but – and this is a very important ‘but’ they should talk to their broker about how they can protect themselves via insurance and if things go pear-shaped, for example, the buyers of their current home withdraw, can they let a part of or the whole property if needed?
My advice for those searching for a home to buy:
For those who are still looking for a new home, agents could help them to carry on doing so via video viewings – I like the Viewber idea of doing a ‘whats app’ live video viewing with the buyer on the ’phone. In the meantime, people can still do ‘drive-bys and walk-bys’, narrowing down the properties they want to view – and hopefully – to purchase.
Agents offering video viewings can keep a pipeline open for sales, so when confidence returns they’ll hit the ground running. If you haven’t done this, it’s worth doing it now.
Of course, if we go into lock down, those agents who have provided video viewings will be able to still keep a pipeline going for properties currently for sale so they can ‘hit the ground running’ when confidence returns, so if you haven’t done this already, it’s worth doing quickly, very quickly.
My advice for those looking for rentals:
From a rental perspective, there are difficulties emerging. Some universities are sending students home – possibly not returning until September or even January 2021 and the short term let market has been hit hard.
Moving forward, those on benefits and in jobs that are stable during past recessions are likely to be the safest tenants. If voids start to rise, we still have a big problem of in some areas, especially with families in B&Bs, so tenants searching for a home and an agency can’t help, it might be worth suggesting they contact the local housing office to see if people can be given a decent home, even if it is at a reduced rent.
Of course landlords need to be flexible on rental payments – and many of them will be – it’s important that tenants realise this isn’t a ‘rent free’ holiday, they will have to pay the money back and although, for some landlords, mortgage holidays are available, this can end up costing more in the long run. Landlord Action is launching a ‘tenancy mediation service’ during the eviction ban period and any help you can give to tenants losing their job is worth investing time in to get them back on their feet.
As long as we don’t get a full ban on movement, then the industry should, albeit at lower transaction levels, still be able to carry on as long as it takes all the precautions on health and safety advised by the government.
What happens next
To work this out, I’ve have taken a good look at what’s happening in other countries such as Italy and the US. There is little good news. As I write, California has just gone into lockdown, so it’s worth watching what happens there over the coming weeks for up to date understanding of the impact in that area.
In some other areas, such as Australia, instructions were reported to rise initially as people ‘rushed’ to sell. The difficulty is finding a buyer willing to commit at this unsettled time and properties for sale are expected to reduce over the coming months. Although in theory this is temporary, the fear is that resulting high levels of unemployment could get much worse across the market for the rest of the year.
In the USA one survey of realtors was actually quite positive and a recent interview with a developer suggested that little had changed so far, including prices. Some though have reported a decline, especially in California and Washington, which have been the hardest hit by the virus. With mortgage rates falling due to interest rate reductions, they are hoping this will keep buyers interested, but, as with Australia, the fear is that unemployment could be a longer lasting impact.
In Italy though, things have gone downhill rapidly with their lock down, although there were reports that prices weren’t under pressure and some reports that in the likes of Milan, rents actually rose, while transactions have, unsurprisingly, fallen.
What can we do to keep going?
What can we do in the UK to keep the market moving? Firstly, we should all be implementing good hygiene practices to give buyers, sellers and renters the confidence that it’s relatively safe to still move home.
Secondly, it’s about keeping in touch with everyone about what’s happening. People are expecting prices to fall, but that may not happen. London, East Anglia and the South has already seen prices flatten and places like the North East has yet to see (on average) prices recover to 2007 levels, so we are into unchartered territory as far as what happens next.
From a rental perspective, the hardest thing will be managing tenant and landlord relationships and finding a way to help tenants who have lost their jobs or are sick to still pay some, if not all of their rent or come to an temporary agreement. Voids are likely to increase and people may not wish to move, in which case, the local housing office could be a good call and we could use this situation to help reduce the 165% growth in homelessness since 2010 caused by anti-buy to let policies.
Share your news and experience
I will do my best to give you regular updates on what’s happening. If you have any information or feedback that helps me do this, do contact me and if I can help answer any of your questions or fears from a market perspective, do ask.