No one really knows what longer term impact the Covid-19 pandemic will have on the UK property market and particularly the lettings market. But now that lockdown has been lifted, at least in England, it is a very good time for landlords to take stock and plan ahead.
Here are some tips on what landlords should do right now to deal with possible changes in the lettings market and to secure their property investments for the future.
1. Check up with your tenants. Keep in regular touch with your tenants and encourage them to come to you with any issues they may have sooner rather than later. This will help you to help them in uncertain times, and help you to plan for the future.
In particular, if you have tenants whose tenancy is coming to an end within the next few months try and ascertain whether they want to stay or not. Bear in mind that those tenants who are in a difficult financial situation might be looking to downsize while others might be looking to end their tenancy early. Be prepared for this.
2. Review any rent payment holidays. If you’ve offered your tenants a holiday from paying the rent, or perhaps if you’ve reduced the rent, review how that’s going. Are they in a position to start paying full rent again, or do they need more time? If you haven’t already, make a proper agreement with them for how you’re going to deal with things going forward.
Here’s a useful article on Dealing With Tenants During The Coronavirus Crisis.
If you yourself have taken a mortgage payment holiday from your mortgage lender also look at how you’re going to deal with that, either by increasing your payments or extending the mortgage.
3. Catch up on necessary maintenance. If you’ve let maintenance slip during the lockdown – perhaps due to the difficulty of travelling or finding tradespeople – now is the time to make plans to catch up.
Remember that landlords are still legally required to maintain their property even if their tenants aren’t currently paying the rent, although it’s sensible to keep to essential maintenance only for now.
If you or your tradespeople or contractors need to visit a tenant’s home here’s more information from HM Government on working safely in homes during Covid-19.
The annual gas safety check is important and still needs to be done on time. Also Mandatory Electrical Safety Checks apply for new tenancies from 1 July 2020 and for existing tenancies from April 2021 in England.
4. Market that empty property. If you’ve had an empty rental property during lockdown, or soon will have an empty property, get moving with plans to remarket and relet it and minimise voids. There’s still a need and demand for rented accommodation in most cases – but see the tips coming up on new letting markets you might want to get involved in before you decide what to do next.
When reletting a property it’s still a good idea to use contact-free methods like video and virtual tours for viewings and dealing with tenants wherever possible. Here’s a useful article on working remotely.
The process of letting a property continues much the same as it did before Covid-19, except that there have been some changes to the procedure for right to rent checks.
5. Review your overheads and costs. Now is a very good time to review your overheads and costs to make sure you’re operating as efficiently as possible. Keeping overheads and costs low will help mitigate any lost rent, and help keep your property occupied and earning by keeping your rent competitive.
Check that your property business is as tax efficient as possible by ensuring you’re claiming all possible allowances and expenses correctly. Also look at your mortgages, and whether you could change to cheaper mortgages. (If you have a mortgage on a standard variable rate you could very likely save money by changing to a cheaper, fixed rate deal.)
6. Look at other markets to get involved in. Have a serious think about future prospects for the letting market or markets you’re involved in and whether you should explore some new avenues .... pardon the pun .... that might be better and more profitable in future.
Different markets will be affected in different ways as a result of Covid-19. Student markets could be adversely affected, especially if universities adopt more online study methods. Professional lets will depend on future employment levels. Short term lets and holiday lets have been badly affected during the pandemic. But these could recover and even boom in the future if UK staycations become more popular. Family lets should remain secure while demand for good value shared accommodation and HMOs could even increase.
The National Residential Landlords Association (NRLA) suggests that landlords could consider letting their properties to local authorities, to solve local housing shortages. Some local authorities have schemes which offer guaranteed occupancy and guaranteed rent no matter what happens in the lettings market in future.
7. Stick, sell or buy? Last but not least, now is a very good time to review the future of your property portfolio. Some landlords have been tempted to sell up in recent years, but ultra-low interest rates could make property a more attractive investment in the years ahead. There could potentially be more demand for rented property as fewer people can afford to buy. There could also be some good buying opportunities to expand your portfolio in the months and years ahead.
On the other hand, if you had longstanding plans to sell before Covid-19 – perhaps you’ve invested in property as a pension and now want to cash that pension in – you’ll want to think carefully about the best time to sell.
To help you make the best decision for yourself, monitor property prices and rent levels carefully over the coming months.
