The ONS Index of Private Housing rental Prices highlighted that London private rental prices picked up to an increase of 1.1% during the 12 months to November. This was up by 0.9% for the 12 months to October. However, even with the small increase in rates, lettings market performance has been underwhelming, according to Franz Doerr, CEO at rental payments platform, flatfair.
Doer said that: “While it may be tempting to interpret flatlining rental growth as a cause for celebration, the pandemic’s impact on jobs in the service sector — particularly in the likes of London — means fewer private tenants will be able to take advantage of low prices. Many have either been placed on furlough or lost their jobs altogether, so are not in a financial position to consider moving.”
Similarly, many white-collar workers are now working from home – with this trend likely to remain in place at least to some extent, for the foreseeable future (or in perpetuity). With this, many are now taking the opportunity to move further from their offices. Alongside the stamp duty holiday, the second half of 2020 has seen in influx of professionals considering a switch not just from urban to rural life, but a shift from the letting, to buying.
“For the lettings market, the traditionally quieter winter months could this year be quiet enough to hear a pin drop,” Doer added, “Cooling demand means landlords, particularly those in more central areas, could struggle to quickly fill voids if tenants hand in their notices over the coming weeks. “
Doer said that the lettings market ought to factor in developments such as rising unemployment during the first half of 2021, and tenants in financial difficulty should inform their landlords as soon as possible. With this, both parties know where they stand, with the opportunity to draw up solutions and put continuities in place before the situation becomes dire.
Landlords understand the volatility of the current climate, and the challenges this poses to the lettings market. Where possible, some may be willing to hang onto reasonable tenants and agree plans for long-term compromise. Doer concludes by saying: “[More] often than not, landlords will be willing to work with you in coming up with a more flexible repayment plan if you are upfront and honest about your issues”.