Now England has entered lockdown for a 3rd time due to the Covid-19 pandemic. These restrictions are similar to lockdown 2 on 31st October 2020, but less harsh than lockdown 1.0 in March 2020, we still expect same serious knock-on effects for a large number of people, which will continue to inadvertently impact the housing market.
People still want or need to move home – particularly those moving for critical work positions or who would be made homeless, having already sold or given notice on their current property! Agents and landlords won’t be so dependant on virtual viewings during lockdown 3.0, but this will still be an option for those self isolating or a little nervous attending viewings during lockdown.
Guest accommodation providers such as hotels, B&Bs and caravan parks may remain open for the specific reasons set out in law, including where guests are unable to return to their main residence, use that guest accommodation as their main residence, need accommodation while moving house, are self-isolating as required by law, or would otherwise be made homeless as a result of the accommodation closing.
The Government has announced a new £4.6 billion package of support measures for the retail, hospitality and leisure sectors, as well as support for businesses outside of these sectors. This should help ease the financial pressure on some individuals, but will always fall short of the revenue generated by these sectors under normal operation.
With so many non-essential shops and service closing their shutters again there will be a slowdown to the economy. Various financial support services will be made available to help tenants pay bills / rent. The government has again extended the furlough scheme as well as the self-employed income support scheme. In addition to these emergency schemes, there were 2.4 million people who sought Universal Credit for the first time in the two months after lockdown 1.0 started!
The period between the two lockdowns was noticeably busy for the housing market. Predictions of property prices dropping haven’t really materialised, due tor people wanting to move, along with a further reduction in interest rates and the stamp duty savings on offer for purchases completed by 31st March 2021. This has led to property prices across the UK standing 2.5% higher than a year ago.
The student rental market looks like it will continue to take a major hit this year with many issues related to A-level students being graded without final year exams. Some students will opt to defer until next year and some landlords will continue to opt for professional tenants in their HMOs this year with a return to students next year when things are more stable.
The sales market has continue to be frantic since lockdown 1.0 was lifted in July the £89bn of held transactions are filtered through… The market has almost caught up with these transactions. We are only a couple of months away from the stamp duty holiday and help to buy schemes coming to an end. Many more landlords will finally get their properties back from non-paying tenants after the prolonged notice period and court backlog, whereby they may simply cut their losses and exit the market. If this occurs at the same time as the furlough and self-employment support schemes end, unemployment will surely rise, meaning disposable incomes and affordability will decrease.
The first lockdown lasted 111 days, the second lockdown 33 days and then a tier system was introduced. This lockdown (3rd) will be reviewed after 6 weeks, but with the COVID case numbers rising beyond that of the initial wave, it looks likely the lockdown period will extend beyond the 6 week period.
What are your thoughts on lockdown 3.0 and the property market?