The coronavirus crisis has totally broken the UK's housing market
The coronavirus lockdown has left renters and prospective buyers in the lurch and the housing market in total turmoil
By JACK NEEDHAM
In February Amy, a 26-year old journalist, found her new home, forfeited a £400 deposit for a house share in East London where the fourth bedroom is registered as a living room, and waited to move in. So far, so typical of the London rental experience.
With her belongings packed away and the lease up on her former home, all Amy had to do was move in on April 8. But when the coronavirus pandemic struck and Boris Johnson placed the UK on lockdown on March 23, Amy made a plea to her estate agency to postpone her move-in date, explaining that “moving property is not essential travel” — her words, but also those of the government. After all, she couldn’t be expected to move in with four strangers during a pandemic.
One week later she got a less than reassuring reply. “I was told that it’s not beneficial for them to have a room in a flat empty for a month, so they wouldn’t delay [the move in date],” Amy says. “I went very hot in the face, but I wanted to keep my cool as obviously I need a roof over my head.”
For now, Amy is hunkered down at her mum’s house while she and her would-be landlord attempt to formulate a plan that they mutually agree on, but Amy remains dubious that he can find a solution. “Does he think he will pull one out his arse?” she says.
Dealing with landlords is a gladiatorial trial at the very best of times, fraught with hidden clauses and dubious end of tenancy cleaning charges. But, while on a government imposed lockdown, people like Amy are stuck between a global pandemic and the need for a roof over their head.
This situation comes after a period closely resembling some sort of stability. Since the December general election, and with it the final decider on Brexit, confidence in the housing market increased. Data published by Rightmove on March 16 showed that the average UK asking price had surged to an all-time high of £312,625. In February, Zoopla announced the UK housing market had its strongest start for four years in January and February, resulting in an average 1.6 per cent annual growth across 20 major cities.
“The post-Brexit market has been extremely positive. We saw lots of renewed confidence, both from a buying and from a rental perspective,” says Jack Simpson, director at the Birmingham estate agents Wentworth & Rose Property.
This boom didn’t last. “Now, we've seen people reflect on whether they want to be buying or renting a house in the current circumstances,” Simpson says. “And the appetite for people viewing properties has declined quite rapidly.”
In just a few short months, home ownership has gone from a foundation policy for the Conservative government to effectively being frozen, leaving tenants without homes and retirement investments left dormant. “For decades the government has pushed people to invest in property as a reliable source of income,” says Sam Hurst, content marketing manager at OpenRent, an online letting agent. “For people who’ve followed the government’s lead and chosen to do that, this advice has not been very robust in the face of the coronavirus crisis.”
Over the past few weeks, as reported by Landlord Today, SpareRoom has seen a 15 per cent increase in adverts from agents and a 12 per cent increase from landlords, driven in part by, they say, landlords “switching from using short-term rental sites like Airbnb [...] and looking for longer term rents for their rooms”. But even though rooms are plentiful, there’s nobody to view them. Zoopla stated that demand in the week to 22 March fell 40 per cent from the week before, predicting that housing transactions would drop by up to 60 per cent over the next three months.
OpenRent also saw an increase in posted listings at the beginning of March. This influx in more expensive short term properties (with a minimum let of six months) pushed house prices up by around 40 per cent in London. This was short lived though, as this minor spike was offset by a sharp decline after the government solidified its advice on moving homes.
In an effort to limit the damage caused by the sharp decline, on March 18 communities secretary Robert Jenrick claimed that all evictions would be banned in England and Wales for three months. But rather than an outright ban for the duration of the coronavirus crisis, the fine print simply means that existing eviction notices have been extended from two to three months. “Banning evictions for three months and increasing an eviction notice to three months are totally different,” says Hurst.
Current government advice states that house viewings should be avoided, but this messaging remains ambiguous. Recent guidelines issued by the Ministry of Housing, Communities & Local Government says “home buyers and renters should, as far as possible, delay moving to a new home”, but that “if moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on maintaining strict separation”.
Simpson believes that government guidance doesn’t go far enough. “It would be nice for the information to be more prescriptive,” he says. Right now, he adds, it’s on the agents to make the right choice and the right decision. “It’s down to us to do the right thing.”
To help those with few options, Simpson has started working electronically. Money transfers, contract signings and end of tenancy checks can all be done remotely, while house viewings are being done virtually over WhatsApp by those attempting to sell their properties “The only thing that needs to be done physically is pick up the keys, and we can still do that in a safe manner,” he says.
A lack of clarity may be what the public has come to expect from governments, but Hurst believes this will affect the most vulnerable. “People who are looking to move house aren’t doing so willy nilly, they’re people who have very pressing reasons why they need to find a new place to live,” he says. “They could be facing homelessness, they could be getting into debt or suffering from domestic violence. If it’s possible to make house viewings as safe as possible, I would be concerned about discouraging those people from actually moving house.”
This is the exact situation that Alex Ross recently found himself in. Like Amy, Alex was all set to start a new life in Stockport with his partner but was almost left without a home overnight. “We had no idea whether we’d be allowed to get keys for the new property. I was thinking I’d have to squat in my old house,” he explains. He attempted to place his belongings in storage, but “given the current circumstances they were reluctant to take on the business”. Alex’s story has a happy ending, as after a 20-hour day and one broken-down van he was handed his keys and will now spend his time in quarantine unpacking and, understandably, having a beer or two.
The litmus test during this crisis will be on how those with wealth treat those in need. To help both tenants and landlords, OpenRent has introduced a feature called rent pause, which effectively allows landlords to pause their rent collection service with a single button. Over 100,000 landlords have already signed up to the service.
Other property websites have offered similar help, albeit after significant public backlash. Rightmove has cut charges to agents by 75 per cent for four months, while Zoopla offered nine months of free access, albeit as part of an 18 month contract that follows the free period.
Can these measures help usher in normality? Simpson remains averse to speculation, but is optimistic. “People wanting to sell are still going to want to sell, and people are still going to want to move,” he says. “Maybe someone has a child on the way and they’re going to need an extra bedroom. That fact doesn’t change, but it might be the end of this year or 2021 until we will see that.”
That said, he expects some high street players to struggle. “A lot of the big corporate entities are already struggling,” he says. “There are less transactions in the marketplace, and many have offices that in some cases aren’t turning a profit so I cannot see that they will be looking at those favourably.”
When and how the UK housing market recovers can’t yet be fully predicted, but it’s important to note that in an industry where human shelter is the core commodity, the future value of a two-up two-down will likely be rebuilt on grim foundations.
“Without sounding too morbid, for some of those most vulnerable during this period, the ageing population, a lot of those people are property owners,” says Simpson. “Regretfully, I suspect that there’ll be an injection of stock into the market off the back of people passing away.”
Any long-term expectations won’t help those struggling now, though. In Amy’s case, unless her landlord produces a compromise, she will remain without a home and paying rent to stop someone else from being given her room. “I’m left in the position where I’ll be forced to pay the rent, despite not even being able to use the room,” she says. “He obviously feels he’d be able to rent the room to someone desperate in my absence.”