There is a lot we don’t know, there is a lot we can’t control, these are uncertain times. However, haven’t all times been uncertain?
What we do know, is life will never quite be the same again and we will all start adapting to the ‘new-norm’. The same of course applies to property, and Covid-19 will change how the world sees property forever. My advice to you (Landlord/Investor), is not to dwell on what we can’t control, but take action on what we can control.
“Life is 10% what happens to me and 90% how I react to it.” – Charles Swindoll
Let’s just look at residential property, this is the part of the property industry that supplies Humanity their ‘home‘. Whats more important than home? (peanut butter, possibly)
Here are 10 ways I think property will be affected post-Covid-19.
- Divorce Rates – Yes we all know it, divorce rates will significantly increase due to the lockdown measures. This will mean additional houses will need to be sold, or different type of properties will be required by couples who were previously sharing
- Mortgage defaults – with job losses, reduced hours/earning potential, businesses ceasing to trade and all the other financial uncertainties the economy faces, we are aware there will be a minority of mortgage holders who will not be able to keep up with there repayments. Lets just think about the first time buyers, who purchased under the help to buy scheme, the vast majority just about got together the deposit (which was significantly lower than the norm at just 5%), this group would be extremely sensitive, to significant increases to interest rates and changes in there income. This will lead to a certain part of our population now being unable to keep up with mortgage payments, banks taking possession of property and then leading to these properties coming ontotythe open market. According to the following article, a third of our population has less than a £1000 in savings:https://www.express.co.uk/finance/personalfinance/1267717/savings-account-uk-coronavirus-personal-finance-average-uk-savings-covid19-latest
- Uprise – the UK population has been spending more time in there homes then ever before, due to the lockdown restrictions imposed. This has led to home occupiers, realising that they don’t have as much space as they initially thought, especially if they are sharing their homes with others. Habits will change post lockdown and the trend will see more people socialising etc in their homes. This will ultimately lead to future buyers, prioritising space a property provides much higher on their list then they previously did.
- Potential buyers of the past, may now look to rent instead – uncertainty leads to people not wanting to commit! With potential first time buyers now uncertain of their job security, their future potential employment, the way the economy will go, this segment may decide to delay their purchases, or decide renting is the better fit for them currently,
- Downsizing – minimalism is going to be a trend that will start to develop. When you have to go through difficult economic conditions, this will scar you and the way you see money and spending going forward. I honestly believe, that there will be a lot of people who will significantly spend less, reduce overheads, stop consuming unnecessarily and lead more simplistic, minimalist lives. This trend will see some people identifying they could suffice in a smaller property, release equity, reduce mortgage payments, monthly overheads etc….
- Sod Property – bear with me on this one. There will be people who will have used the current lockdown situation to reflect on their lives, their ambitions, goals and come to the realisation ‘life is too short’. If they currently own a property, they may see an opportunity to sell, release equity and go on their next adventure of life, be it travelling, starting a new vocation, educating themselves, whatever it maybe.
- Home Improvements – it was reported there was queues on B an Q’s website of over 365 000 and this led to a wait of over an hour just to get onto the website! I don’t think anyone in this country has picked up on ‘niggly’ items since the lockdown. Consumers will also be using this opportunity to reflect on what they want to do with their properties and what they would like. With property, becoming even more important, home owners will want to improve and invest in their properties. Look out for a sharp upturn in house extensions, renovations coupled with the governments relaxed planning criteria. I know I would love a cinema room and gym 🙂
- Home working space – any of you that have had to work from home for the first time, I am sure you will join in me admitting you have fantasised about the ultimate home working space. Picture of my ultimate office below. We will see a drastic rise in home working and this will lead to the requirements of residential properties being adapted, dedicated home working spaces will lead to an increase in demand. We will also see a change in way people perceive areas to live in, as previously one of the main drivers of renting or purchasing Propety, would be the proximity to their work space
- Garden offices – maybe just my fantasy, however I mustn’t be alone in wanting to have a dedicated, isolated space for me to go and be productive in my zen office set-up. Watch out for a rise in garden offices!
- Staycation – people will still go abroad, but let’s consider trends. A vast majority of us, some due toeing deemed as highly vulnerable, carers for vulnerable people or just out of caution will avoid travelling, mass gatherings and the like. Airtravel isnt projected to get to pre-Corona levels until 2023 and some suggest that it may never reach them levels again. UKs holiday destinations will see a huge upsurge in UK travellers visiting. AirBNB was a growing platform and we will see a significant increase in the growth of this platform.
As a Landlord or Investor, Buy To Let will still continue to grow, it was a growing trend prior to Covid-19 and the last recession led to the biggest boom to the buy to let industry in history and the current economic situation will lead to a further boom. We need to consider profitability, change our mindset from Landlord to Investor, this means maximising returns from our properties. This means looking at our Tenants needs. Shorter time to Let, longer term tenants, better quality of tenants, will all mean a better return from your investment. Give your customer what they want, a better home that suits their needs!