Lockdown Lowdown – May Update
We’re now two months into lockdown and it has been a month since our last update. It’s time to say a few words about our operations and the levels of activity that we’re seeing in the market.
Operations
We haven’t had to change much since we first adapted our processes in the initial phase of the lockdown. We’re still using virtual tours in place of physical viewings as a starting point for tenant applicants. All our marketed properties have virtual tours and we’ve made a few website improvements to guide tenants to our online note of interest form. After satisfactory online processing, tenants can move into their new home without any contact. Our contactless tenant processing is working well, with Western Lettings handling 15% of all let agreed transactions in Glasgow in the first two weeks of May. For context, we take care of approximately 2% of the managed rental stock in the city. We’re expecting widespread adoption of virtual tour technology across the sector in the months to come, with tenants becoming increasingly comfortable using it to choose their next property.
Routine property inspections are still paused and it’s difficult to imagine how they will be carried out soon. We’re currently investigating new technology which supports remote inspections via tenant smartphones.
Emergency maintenance is being taken care of, with less urgent issues being logged for later. This will likely change in the next few weeks as lockdown restrictions are eased. Our intention is to ask tenants with outstanding minor maintenance to let us know when they would like us to deal with the issue.
Our team are still mainly working from home. We’ll keep that under constant review as the Scottish government guide us through the lockdown ease over the next couple of months. Core operations, such as rent processing are unaffected.
Rent Arrears
Arrears are starting to improve. In the past month, the number of tenancies in arrears has decreased from 6.7% to 5.9%, with most of these tenants having arrangements in place with their landlords for reductions or deferrals. We’re hopeful that this trend will continue, though it will depend on how successfully the government schemes are at reducing the economic impact of the pandemic.
Market Dynamics
The most striking change is the number of properties being let. According to Rightmove, the number of properties let in Glasgow in April is 73% less than in the same month last year. New instructions are also down for April, suggesting that a fair proportion of recently vacated properties are waiting to come on the market when viewings become practical.
At Western Lettings we’re seeing a slowdown in tenants giving notice. From a peak of 31 in March, we had 21 in April and there are currently 16 scheduled for May.
Taking everything together, we’re expecting an overhang of vacant properties to hit the market in the next two months at the same time as a rush of tenants will start looking for their next home. It’s impossible to say where rent levels will end up when the dust settles on that market. There is anecdotal evidence that rent levels for new tenancies are marginally lower than pre-crisis levels, but it’s difficult to draw conclusions from such small datasets.
That’s the news for now. Please get in touch if you’d like us to help with anything.
