Governments around the world are looking into ways to protect their residents and economies
Over the past week of emergency government announcements, the Housing Secretary in the UK Robert Jenrick MP announced:
“The government is clear – no renter who has lost income due to Coronavirus will be forced out of their home, nor will any landlord face unmanageable debts.
These are extraordinary times and renters and landlords alike are of course worried about paying their rent and mortgage, which is why we are urgently introducing emergency legislation to protect tenants in social and private accommodation from an eviction process being started. These changes will protect all renters and private landlords, ensuring everyone gets the support they need at this very difficult time.”
This message is being rolled out around the world, not just the UK and Europe. The good news is that protection should be available for anybody suffering financial shortfalls during the crisis.
Does this mean we should all stop worrying about our rent and rentals during the Coronavirus?
The UK is not alone when it comes to protecting its residents. Many families and workers on low and medium incomes or living paycheque to paycheque are now trying to manage on reduced hours, pay cuts or after being laid off due to the current pandemic crisis.
It’s a confusing time where many aren’t sure where the money they need to live on is going to come from. The fact that residents have been told they can’t be evicted for the foreseeable future is at least a small consolation. European countries and states all across the USA have implemented similar terms, protecting those with low incomes, offering rent and mortgage holiday breaks to ease the pressure for those who desperately need it.
So far the UK government has promised £330bn in loans and another £20bn in aid.
Italy, the hardest hit of the European countries so far, has also invested €25bn into an already weak economy. Typically, measures include suspensions on loan and mortgage repayments and increasing funds for those laid off temporarily due to the lockdown. These are seen now as standard practices across so many governments under the same financial challenges.
The crisis has come at a time when demand is high for rental properties
Rental demand in the UK is as high as it’s ever been, and it’s not only there that this is the case. The prediction is that demand is only going to increase, so property prices are unlikely to be too badly affected.
However, with around 200 thousand people typically buying or selling property every month in the UK, there’s a level of uncertainty into whether the market will be able to continue to perform during lockdowns. Another critical factor is the effect the crisis will have on the psychological concerns of buyers and sellers.
Although the investment outlook remains positive for when the Coronavirus pandemic settles, nobody can be certain how long it will last, and the long-term effect it will bring.
Property viewings in person become restricted, but virtual viewings are still happening within the COVID-19 property market
With many of the European countries now in a lockdown situation, then any property viewing is considered unnecessary travel, and also goes against the rules of social gathering.
There are features on many sales and rental websites where virtual tours are available. However, that’s not always an ideal to view a property, especially where a sale is involved.
However, the regulation and the stage of virus containment are varied over each country. There are still many businesses that have yet to suffer an enforced closure. Especially where housing and accommodation is concerned.
Complications with landlord insurance and COVID-19
Savvy landlords will have taken out insurance against tenants who default on making their regular rent payments. The cover often includes missed payments and arrears that amass during the eviction process. Many policies will cover unpaid rent of a minimum of a single month and can pay out up to £250k. However, under current legislation, where policies may only be claimed against on the issue of repossession or an eviction notice, this practice isn’t legally enforceable over the next 3 months. This blanket ‘zero eviction’ safeguard will provide a brand new problem for landlords hoping to lean on their insurance policies. They may be better looking into the government support or having a conversation with their insurance agent about each case-to-case issue. At the very least, they should be holding a discussion with their insurers about what their policy can and can’t provide for them.
Interest rates dropped to protect the economy during the Coronavirus pandemic
As well as the amount of aid and assistance that is to be provided across the globe, interest rates are falling to all-time lows to protect each country’s economy. To better protect the UK economy and its consumers, the Bank of England has dropped the base rate right down to 0.1 per cent.
The fact that interest rates are the lowest they’ve been offers an opportunity for those who were looking into buying property or getting on the property ladder. Low interest rates translate into what could be a great time to get a good deal on a mortgage. However, understanding those implications it wouldn’t be surprising to see the banks and lenders shutting down such options in light of what’s happening around them.
So far, property prices are remaining stable. For those not entirely preoccupied with what is happening around them, or drawn into current worry and safeguarding their assets, this could be a time to consider whether property is likely to increase in value or fall. Could this be time to take advantage of an unusual opportunity to develop from within a crisis?
Keeping properties occupied that typically depend on short-term lets
Holiday rentals and tourism properties are off the table during the crisis. Finding a different type of occupant, if at all possible, is one alternative apartment owners will be desperate for. One way for landlords to protect their rental income is to utilise a business operating a guaranteed rent scheme. UpperKey is an excellent option during this time of crisis. They are specialists in locating the right tenants for your property, wherever you are.
The risk of filling a property, or whether they can pay their rent, is no longer yours to worry about. UpperKey will act as your tenant for the length of your agreed term, paying you rent every month as agreed, whether your apartment or property is occupied or not.
Could this be the answer you’re looking for in a time of crisis? We believe it was a superb option before the pandemic, and now even more so than ever.