A month into lockdown and we feel it is time for another update. We want to provide some information on how we are dealing with operational issues and make a few comments on what we are seeing happening in the marketplace.
Although most of us are working from home, essential functions are being carried out as normal. Rent processing and landlord payments are taking place in line with our usual procedures. In keeping with guidelines on social distancing, we’ve suspended routine property inspections. Essential or emergency maintenance is being carried out as normal and we’re logging non-urgent maintenance, which will be taken care of when lockdown measures are eased.
We’re still processing tenant applicants as normal, with the only difference being that the usual face to face viewing is replaced with a virtual tour. All the tours are available on our website, together with floorplans and the usual marketing photos, location details and descriptions. At the top of each virtual tour there is a button to make an application for the property. From that point on tenant applications are being processed as normal, with online referencing and digital signing of tenancy agreements and inventories. All compliance certificates are provided digitally using OneDrive. For checking in tenants, we’re attending the property beforehand to get meter readings and then making keys available for contactless collection by incoming tenants.
We are pleased to report that rent arrears are not as high as some had feared. In most cases, where tenants are struggling financially their landlords have been very understanding, and it has been possible to come to some arrangement.
Overall, 6.7% of tenants are currently in arrears, with 5.4% having made some arrangements for deferred or reduced payments. Bear in mind that many of these arrears are for small amounts and they may not be very late.
We are very grateful to both our tenants and landlords for their very reasonable behaviour during the current crisis.
The most significant observation is that many tenants have decided to end their tenancies. While some of them will be students who have decided to return home following an end to classroom teaching, others may be reducing their financial exposure by moving in with relatives or friends. At the moment we have 37 properties on the market when we would typically have around 20 at this time of year.
Unsurprisingly, applicant numbers are significantly down. At this time of year, we typically see 25 tenancies starting per month. We currently have 11 scheduled for April, most of which were already agreed before the crisis emerged. We have 5 tenancy starts scheduled for May, although that number can be expected to rise.
This trend can be expected to continue as the lockdown progresses. The rate at which properties become vacant will exceed the rate at which new tenancies start, so that there will be a continuous build-up of vacant properties on the market until the lockdown eases. This is exacerbated by a glut of former Airbnb properties being made available for longer term rental.
We expect that when the lockdown ends, there will be a surge of pent up demand. While rent levels are slightly down now, it is difficult to predict what will happen when a surge of demand meets a glut of supply at the end of the lockdown.
We will continue to monitor the market and provide updates as the lockdown progresses. If you’d like any further information, please get in touch.