As lockdown continues and uncertainty surrounding the housing market takes full effect, it’s not just homeowners feeling the squeeze. According to estate agents Hamptons International, rents on renewals dropped by 0.5% year on year for the country as a whole. This is said to be the biggest drop since 2014.
It’s understandable that during this uncertain time, renters are also choosing to stay put rather than consider moving home. Even though Rightmove has previously reported that the searches for rental properties with gardens were up since the lockdown started.
Hamptons reported that seven in ten people who saw their tenancy up for renewal in March decided to renew. This is also one of the most significant proportions of tenants choosing to renew since the financial crash in 2008.
However, although the economic impact of the pandemic is showing in the drop in rents, there is a varied picture throughout the country, with London recording its biggest fall year on year of 2.2%.
Head of research at Hamptons International, Aneisha Beveridge, said: “the first signs of the Covid-19 effect on the rental market are starting to show.
“Tenants’ concerns about their future income prospects combined with greater risk of void periods for landlords willing to advertise their property on the open market, resulted in the rent falls.
“London, where tenants’ incomes are more stretched, recorded the biggest fall in rents.
“Once lockdown restrictions ease, we expect activity levels to rise.”
Struggling to pay
Although tenants are choosing to renew their contracts, millions of people are still struggling to pay the bills. A survey carried out by eviction firm Landlord Action found that around 74% of landlords had been contacted by tenants saying they may struggle to pay their rent this month.
There have been calls recently to the Government by renters unions to suspend evictions based on rent arrears during the pandemic. A petition was recently started because the after-effects of Coronavirus could see many people become evicted even if they had previously agreed payment plans with their landlord.
Acorn Renters Union said: “nothing has been done to protect renters from getting into rent arrears. The Government has said that landlords and tenants should agree on repayment plans but have not legislated for this and have given renters no security on this.’
Paul Shamplina, the founder of Landlord Action, said the Government should be wary of taking a ‘one-size-fits all’ approach.
Shamplina said: “This is a nightmare scenario for everyone – landlords and tenants alike. However, taking from one group to give to another is not the solution.
“The vast majority of private landlords own one or two properties, many with mortgages, and they too will be facing the same challenges of job losses.”
Landlord Action’s survey also highlighted that 36% of landlords would struggle to pay their mortgage if the tenant did not pay. However, there is the option for landlords to request a payment holiday with their bank, which may give some reprieve.
