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Finance brokers think lending will recover within 9 months

Around 77% of brokers surveyed believe that lending, mortgages in particular, will stabilise and recover to pre-pandemic levels within 9 months. Half of those surveyed (51%) believe it will happen inside of 6 months, research by Smart Money People has shown.

Smart Money People’s managing director, Michael Fotis, commented “Tentative steps are being taken to get the economy moving, and many lenders are talking loudly about their appetite to lend.

“That said, with job security likely to be a concern for many consumers, and predictions that house prices may decline by up to 13%, it’s really hard to see customer appetite for new mortgage lending returning until 2021 at the earliest.”

Equity release brokers proved to be sceptical of a recovery with only 19% feeling that lending will return to normal levels within 6 months.

So what does this mean for investors and landlords? Perhaps the days of worrying whether you can refinance or get that pesky deal over the line, could soon be over. And as the government flood the market with liquidity following the Covid-19 financial aid measures, maybe we could even see a spike in housing market activity, from sophisticated and ‘newbie’ investors alike.

Housing market released from lockdown

Estate agents can now open, property viewings take place and surveyors and removal firms can now operate, effective immediately as the government set out plans to reboot the housing market yesterday.

Housing Secretary, Robert Jenrick, said the activities must still be carried out under social distancing rules, “Our plan is clear, we will enable people to move home safely, covering each aspect of the sales and lettings process, from viewings to removals… This critical industry can now safely move forward, and those waiting patiently to move can now do so.”

The plans included allowing tradespeople to operate, provided they also follow the strict, social distancing rules. Among these changes in measures, the government outlined changes to the house building sector:

  • Builders to agree more flexible working hours with local authorities to help ease pressure on local transport and communities
  • Enabling local authorities and builders to make public planning applications through social media
  • Allowing smaller developers and builders to defer payments to local authorities to help ease cash flow

These new measures will test whether there is the anticipated ‘postponed’ demand from a wave of buyers and renters, many of whom have had their plans put on hold just before the pandemic hit.

Jonathan Hopper, chief executive of property consultants Garrington Property Finders believes the demand is still out there from buyers for new property purchases.

“The lockdown may have halted conventional viewings, but there are plenty of signs that some would-be buyers have used the past six weeks to ‘window-shop'” he said.

The start of the Covid-19 pandemic saw property buyers flee the housing market, which led to a 70% drop in buyer demand over the course of just a few weeks and rental demand down by over 42% since the start of March, according to Zoopla. The government estimated more than 450,000 buyers and renters had been unable to progress their plans to move since March.

Only time will tell on what the market will now do following the lifting of these restrictions, many experts believe there could be a short-term spike, followed by a longer-term dip as the housing market takes a chill from the recession.

Lettings and renting in a pandemic

Ben Quaintrell, Letting Agent of 15 years (above). How to continue to survive and thrive during Covid-19 We hope you are managing to stay safe during these worrying times; we wanted to share the steps we’re taking that will allow us to continue to service our customers whilst ensuring we all emerge from this pandemic […]

Eviction Ban: 3 month extension

Housing and Communities Secretary, Robert Jenrick, during an online Q&A session with MPs on the Parliamentary Select Committee announced that the effective ban on evictions in the private rental sector may be extended by 3 months.

This comes as a blow to landlords with problem tenants, as well as neighbours next door to dysfunctional HMOs and properties with antisocial behaviour issues.

This won’t come as a shock to most landlords, as part of the government’s assault on the private rental sector. With the abolition of Section 21, changes to Section 8, growth of Article 4 dictations and the changes to tax legislation make this yet another ‘below the belt’ hit to landlords who currently operate. The government has already forced landlords to keep tenants that can’t pay in their properties.

We cannot discount the tenants who are genuinely struggling to pay due to the effects of the pandemic, for example those who have lost their job as a result. What the extension doesn’t account for are those who were due to be evicted pre-pandemic, already thousands of pounds in arrears who were granted evictions that were simply badly timed.

The semantics used also introduced a level of confusion. Many tenants automatically stop paying because they believe their landlord has a mortgage ‘holiday’, when in actual fact this is not a holiday, but a deferral of the payments – they still have to be paid. Many tenants see this as an opportunity not to pay, as well as wrongly thinking those rental payments have been ‘written off’ and not payable, largely thanks to the government.

Compounding the issue is the fact that landlords (many of whom are working professionals, not millionaires) are receiving no assistance from the government directly. This discounts aid such as Business Bounce Back and CBILs loans, which are reserved for sophisticated landlords, who need less help than the average landlord, who isn’t classified as self-employed by HMRC. Many aren’t eligible for any help via the Universal Credit system, either.

This is seen by many as a cynical move by an otherwise ‘finger-pointing’ government. Many landlords are already looking to pull out of the private rented sector and opt for shorter-term lets such as holiday-lets or serviced accommodation. As this trend increases, so will homelessness, as private landlords form the majority of the rental stock in the UK; which can only lead to further homelessness down the line.

The government can only punish landlords for so long.

Bank of England warns of worst recession on record

Today, the Bank of England has warned that the current pandemic, brought on by Covid-19, will bring about the biggest recession on record. It speculated the economy as a whole will shrink by 14% in 2020 (if lockdown measures are relaxed sometime in June).

Research by the Bank of England shows the economic impact by Covid-19 had been “dramatically reducing jobs and incomes in the UK” during the period.

The policymakers voted to keep interest rates at their record low of 0.1%. There was some disparity between the Monetary Policy Committee (MPC) on whether to increase stimulus into the economy. A total of 22% of the committee voted to increase the latest round of quantitative easing to £300bn.

The Bank of England’s analysis was based on the lockdown measures being phased out gradually from June onwards. Its latest Monetary Policy Report illustrated that the UK economy would enter its first real recession in more than a decade. It shows the economy shrinking by more than 3% in the first 3 months of 2020, with a much sharper decrease in the months from June.

This would cause a recession in the UK due to two consecutive quarters of economic decline.

The Bank commented on the housing market, saying it had effectively come to a standstill. In addition, all consumer spending had dropped by 30% this month.

For the whole year of 2020, the economy is expected to shrink by over 14%. This would be the largest decline on record, according to the Office of National Statistics (ONS).

The economy isn’t expected to return to pre-pandemic conditions until at least the middle of 2021. Governor of the Bank of England, Andrew Bailey, expects any ‘permanent economic damage’ caused by the virus to be relatively minimal. He said the economy was “likely to recover much more rapidly than the pull back from the global financial crisis”.

Paul Million on dealing with Covid-19

Dear Blue Bricks Magazine,

I was down In London doing a bit of networking (Knightsbridge PPN don’t ya know!) and researching co-living / co-working environments when the interest rate bomb dropped! 0.5%? In a ‘one-er’? WOW.  I nearly spat my frappe-latte-mochachino with sprinkles all over my man-bag…

Now, I’m a seasoned, been round the block more times than ‘Jenny-from-the block’, 3 decades of land-lording type leather-faced ape so I knew this meant one thing. This was The Government moving towards an Economic Defcon-4. A kind of ‘siege mentality’ ensued, in my head at least.  A couple of days before Lockdown came, one of my three SAs (serviced accommodation) had emptied of a six-month booking. I expected my other two SAs to empty of the Eastern European contractors but they turned out to be Amazon contractors, so all good. Amazon coming to town has done Darlington a huge favour. I had devised and posted on FaceyB about my new strategy SA 2 HMO expecting to repurpose them as Mini-Mos which I only had to do with one SA. Two brothers took my empty one for £200 per week. Costs easily covered. No servicing on any SAs. The missus was pleased!

I created Bandit-Boards for strategic places around The Hospital carpark offering accommodation to key workers. That was for a couple of single lets I had coming up. I had surprisingly little response but there was another turn of good luck with Amazon requiring more accommodation for ‘Key Workers’ so they are full for at least 5 months. These needed furnishing and the workers arrived after Lockdown so we pilfered our lockups and cobbled, begged, borrowed and stole enough furniture to purpose them as SA.

Just pre-Lockdown a few of my HMO rooms had started to empty of young professionals running for the hills, or rather a cushty lockdown with Mum & Dad, to add to the four empty rooms I already had. I set about hitting Spareroom.co.uk with added impetus to see what I could fill and yeah, with Amazon coming to town the demand was there and also other young professionals getting settled in time for a work placement, who paid, but never arrived! They had signed their ASTs online and are currently in a holding pattern but still paying rent.

I co-host The Property Thing networking extravaganza with Anthony Boyce and previous to all this we had not exactly ignored, but had been sceptical of warnings that Harpreet Badwal, The Health & Safety Industry guy had given us regarding ‘no public gatherings’ in the near future. Nah, surely, won’t happen? Oh yes it did! 100%. None of that networking malarkey!

I was massively driven and put in silly hours at work to sort all this out and my own lads were flying round sorting it all too. I messaged all my tenants single let and house-share group chats to say that no-one was to worry, we had their backs 100% in this. We had time on our side and to please contact us if anyone was worried about their jobs and subsequently their rent. I’m a massive believer that as long as no-one ignored the situation we could help them, and we would know where our cashflow would be. Thanks to Boris & Co doing a sterling job of the Sterling flow we received a grant and we just paid any outstanding invoices to all and sundry so we knew we were operating from a datum point. Very few suppliers’ bills to come in and just staff to pay and the usual mortgages etc. March month end was good with 100% Occupancy and 2% paying 50% rent.

I start work really early and finish late so I’ve been self isolating in my office while my dependants, home from uni and off school, bask in the April sun. I’ve had three investors go into the inevitable holding pattern on three big HMO/co-Living/apartment projects and one investor appeared wanting to do business albeit cautiously of course. I’m going ahead with the planning gain on my future projects anyway. They take two months to get and it’s a ‘Sprat to catch a Mackerel’ for when the dust hopefully settles. Surviving the last recession and building a more robust portfolio as a result certainly helped my mindset in this one. It helps being focused on solving problems. Massive thoughts going out to those who’ve suffered as a result of this pandemic.

Much Love,

Paul Million, Real Property People Ltd

Darlington

Rachel Tasker on 2020

Dear Blue Bricks Magazine,

I entered this year by far the most positive, organised and up for it than ever!

Long and short term business plan all sorted, vision board and list of big goals at the ready!

One of my main goals for 2020 was to buy, refurb where necessary and let out 6 houses, having done 4 last year I felt this would push me but still be achievable.

In January I bought a repossession at a negotiated price of £60,000, £6,000 refurb budget, £3,000 fees even allowing a bit of over spend the £70,000 mark was a happy place and as I already have several houses on that estate I knew I could achieve £550 rent for a newly refurbished 2 bed house. So a great start and everything went to plan, on time on budget and I even got a tenant lined up just before I got it finished… The dream start to the year with BTL.

While working on that house, I was viewing all over the Gateshead area and finding that houses were all getting snapped up at asking price and above, this was in February, I put quite a few offers in but they didn’t get anywhere, then one agent rang back with a deceased estate house being reduced by £10k, I viewed and tried to get it further reduced however there was other genuine interest and my good relationship with the Estate Agent led me to understand £75k was the price to get it.

I was really pleased as it was going to be a fast sale and would be timed perfectly for me finishing other projects.

However, what wasn’t in my plan for the year was coronavirus?

I was meant to complete the purchase on the Friday before Boris announced the lockdown however due to the family not emptying the house I was told we would need to complete on the Monday instead, no problem really however there was a lot of media attention about this lockdown situation coming and I didn’t fully understand the impact it could have so I took a lot more notice over the weekend and of course by Monday morning when it was all over the news I became very concerned that I was not clear on the impact this could have on my purchase and as I was using a bridge of £50k I became uncertain of how I would get trades there and even if I did would I definitely be able to get materials?

Going with my gut I no longer felt comfortable so I rang my solicitor by 11am and said I am not pulling out of the deal but I want you to tell the other side I want to put it on hold until the coronavirus and the impact it may have on us  is clear, and please explain the reasons why. I have always found that if I’m in doubt it’s better to do ‘nowt’!

So ‘nowt’ it is, I am watching and waiting and taking an overview of the entire situation and until I know I can develop and invest with confidence in all areas that play a part in my business I am on hold.

All my rentals have paid me without a problem or without up to now asking for a reduction so all the hard work I have already put in over the years has paid off and other than minor maintenance issues I can deal with either outside or when people are out of the properties I am spending the coronavirus time with my Sons and continually educating and developing myself.

Being realistic I am not going to achieve this year’s goals in the time frame originally set , however I will still achieve them, I have no doubt about that!

I have had many, many outside influences cause all kinds of problems to my business over the years, I just see Coronavirus as the latest problem to get around and after this has all settled down there will be some other problem crops up, you just have to keep monitoring the situation, make informed decisions and carry on, sometimes in a different direction but you must carry on when it is appropriate to do so.

Stay safe  x

Thanks

Rachel Tasker

Northside Homes Limited 

Gateshead

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