What does a second lockdown mean for the property sector?

As England’s second lockdown gets underway, those in the property sector will be wondering how the new restrictions might affect their business. It’s still too early to gauge the impact on things like sales and lettings, but while the impact will probably be slight for most, there are some developments that may be worth considering.

Business as usual in most cases

You only have to look at how busy the roads are to notice that this lockdown is quite different from the last one. For most people, last time round it really was a case of battening down the hatches and staying home except for a brief window of solitary, government-sanctioned exercise each day. This time the restrictions aren’t nearly so strict, and the lockdown period is limited to a month. 

Apart from anything else, we’re all getting used to working around COVID-19 by now. Pretty much every industry now has safety measures and guidelines in place, and while it’s undoubtedly going to be a big hit for some sectors (such as hospitality, travel and retail), the effect on the property sector is likely to be minimal. 

It’s possible that people might be less inclined to carry out property viewings during the lockdown period, but there’s no ban on it this time round, and it will be interesting to see how busy agents end up being. In terms of sales, the stamp duty holiday remains in place, and lockdown or no, buyers won’t want to let this opportunity pass them by.

For landlords with tenants in situ, maintenance responsibilities remain unchanged – as they have throughout the pandemic – and in general it’s likely to be business as usual. There are a few things worth noting, however. 

Suspension of eviction enforcement 

Eviction has been a hot topic right since the first lockdown began. The government is keen that no-one should become homeless during the coronavirus pandemic, and to that end they suspended eviction proceedings back in March. While this gave many vulnerable tenants a great boost of extra security, it did also mean that landlords with tenants who were already in arrears when lockdown began ended up potentially facing another six months without rent.

Eviction proceedings have now restarted – prioritising the most urgent cases first – but there was an interesting little bit of government guidance a while back that stated bailiffs would not be enforcing evictions in areas under tier-3 local lockdowns. Since the whole of England is now essentially under tier-3 restrictions, it seemed likely that the ban on eviction enforcement would become a national thing, and the National Residential Landlords Association (NRLA) has recently clarified with the government that this is indeed the case. That doesn’t mean that repossessions can’t go ahead – just that they won’t be enforced until the restrictions are relaxed.

The knock-on effects of the furlough extension

As part of the new lockdown, the Coronavirus Job Retention Scheme has been extended until March 2021. It’s these grants that have allowed employees to be ‘furloughed’ on 80% pay, with similar arrangements for some self-employed people. The scheme was due to be replaced by a much less generous version in which the employer took on most of the expense, and it’s likely that the extension means more people in precarious jobs will keep them a little while longer. 

This in turn might help extend the ‘mini-boom’ in property sales, and may also mean landlords are less likely to find their tenants facing financial issues. The question is whether the furlough extension will be enough to tide people over to a period where their jobs become more secure again, or whether it is just postponing an inevitable downturn in job prospects further down the line.  

Preparing for the great student evacuation

Landlords with student properties may need to start considering the government’s proposed mass evacuation of students when lockdown finishes. The idea is that students will be strongly encouraged to travel home for Christmas more or less all at once during a special ‘travel window’ between 3 and 9 December. Hopefully, the government says, this should mean they spread the virus less widely when they return to their home communities, since fewer of them will have it after a month in lockdown. 

What it does mean is that students may be going home for Christmas a lot earlier than usual, and this may have knock-on effects for their landlords. Of course tenants should continue to pay rent as normal, but there is the possibility that student houses may be sitting empty for a month or even longer – depending on when the occupants return after New Year. The combination of empty properties and cold weather is not a good one, and landlords would probably be wise to get in touch nice and early in order to ascertain how long the tenants will be away and explain things like the need to leave the central heating on low, turn off the water and make sure the place is left secure during the long break. Depending on your policy, you may also need to notify your insurance company.