Coronavirus and private landlords
This will be a regularly updated post looking at coronavirus and the private landlord and the private rented sector generally.
In it, I will also challenge the assault on our human rights, which is coming in under the cloak of the virus.
But first, the coronavirus and the private rented sector.
The coronavirus is throwing up big issues for private landlords and the private rented sector.
The prime issue is the concern that tenants will lose their jobs and be unable to pay their rent. Many landlords will be anxiously checking their records to see what sort of work their tenants do as some sectors and some types of jobs will be more immediately impacted – and hit much harder – than others. Some sectors will be impacted in the longer term too.
The government started on 16th March by magicking up some eye watering sums to help businesses in different ways – and also some help for folks with residential mortgages. They could get 3 months mortgage deferment.
Then, followed measures to help the private rented sector too, the most logical being that Universal Credit be paid immediately to those who lose their work and at a higher level, so that this can help tenants pay their rent to landlords.
Now, thankfully, the lenders who issue landlords buy to let and BTL company mortgages have said they can defer payments on landlords’ loans for 3 months. This includes those in company structures, (to my surprise), which is good. (I was worried folks who moved to a company structure to save tax following the Section 24 changes may possibly find they would be treated worse than those that did not).
I am sure that all good landlords will try to work with tenants they trust and will do all they possibly can to not lose good tenants by offering rent deferment, where they can afford to do this, but there is a limit to what landlords can do. For example, we cannot tell our heating engineers that we cannot pay their invoice for fixing a boiler or our electrician for fixing some electrical problem.
Also, for at least 3 months, landlords will also be prevented from issuing new Section 21 possession orders. Possession orders already in process can continue. (Take note GenerationRent!)
The Bank of England initially dropped the base rate by 1/2 of a percentage point, then on 19th March, down further to just 0.1%. So good news for landlords in the private rented sector like me, who mostly have base rate tracker mortgages. Of course, this will be of nil benefit for the more risk averse folks who opted for long term fixed rates. The many lenders who offered lifetime trackers back in the old days must be even more aggrieved that West Brom were defeated five years ago at the Court of Appeal, when they tried to wriggle out of their lifetime tracker.
And finally, with the last bazooka on Friday 20th March, the government has offered to pay wages of employed people up to 80% of their pay up to £2,500 per month. There are calls for more help for the self-employed too.
The cost of all this will be truly staggering and the impact felt for years.
I predict house prices will fall to as much as 20% below their current value. House prices being sticky downwards, (sellers take a long time to accept their house is worth less), this process may take 2 years.
I think rents in the private rented secctor will fall far faster – new rentals rates could drop by the same amount, but in a matter of weeks as landlords and letting agents will find demand and tenants’ incomes has plummeted. Existing contracts will take longer to fall, but will drop by the same level at their renewal dates or possibly sooner, if pressure from tenants who may struggle to pay rent is strong.
Meanwhile, the serviced accommodation sector is totally dead for the foreseeable future as holiday traffic and business traffic alike has been killed stone dead by coronavirus. Where they can, owners will be considering moving their properties back into traditional buy to lets. This extra supply of units will also depress rents in traditional long stay buy to lets.
GENERAL COMMENT ON CORONAVIRUS
The next set of comments I make may be more contentious for some people. However, I will say them anyway.
Coronavirus and the assault on civil liberties
Firstly, I am worried by the way the government has curtailed civil liberties in many democracies – and that people have blithely accepted these changes. For example, forcibly quarantining someone with a high temperature, fining them, even imprisoning them. Also, telling old people they are not allowed out.
These, for me, are steps that seem truly Orwellian. We would be far better off trusting people to keep away from people who are vulnerable to getting ill from this virus and for those who treat the old and already sick to take great care to not infect them and to keep a safe distance from all other people. People are not stupid – they know what to do and what not to do. I was going to visit my elderly parents at Easter. Now I am not. I worry about limits on our democratic freedoms under any circumstances, even this.
These sorts of restrictions must be lifted as soon as possible once the emergency is over – and people trusted to do the right things. Most do! Most people will do the right things but a small minority won’t and the threat of fines and penalties will not change their behaviour one iota.
Coronavirus and the media frenzy
Secondly, I am astounded by what seems to be an over-the-top media frenzy and seeming reluctance to tell any good news stories about the virus.
There are, in fact, a lot of reasons to be positive. For example, the fact that for over 95% of people, maybe 97% who will get it, the coronavirus is not serious is rarely repeated in the media and few interviews are done with people who have got it and /or recovered. There was nothing much in the media until March 20th on how much of SE and E Asia has already got back on its feet again. Even now, you hear little about this.
The main media, in trying to bid up the panic to get clicks or viewers have become very selective with statistics and fail to put them in any context. For example, as at the morning of 19 March the TOTAL UK death toll from coronavirus was 102, all of whom sadly suffered from “underlying health conditions”. In any one day, there are 100 deaths directly caused by air pollution! See link: https://www.gov.uk/government/news/public-health-england-publishes-air-pollution-evidence-review
Of course this figure will rise, and we need to be vigilant, but the thing has to be kept in perspective. In Italy, Bloomberg reported on 20th March, that the age of death from coronavirus was 79.5 and 99% of those who died had other serious underlying health conditions. Again, this is rarely reported.
Coronavirus and the impact on the economy
Thirdly, it is clear that this coronavirus will be around for some considerable time. Most of us will have to get it at some point, but we will almost all get better and get on with our lives. (I would not mind getting it, to get the thing out of the way and do the “isolation thing”, whilst the weather is lousy and my elderly parents are well. No, I won’t be seeing them whilst I risk being infected! But no luck yet as I don’t actually know anyone who has got it who could infect me).
But the government has effectively crashed the economy to protect the NHS from being overwhelmed and to protect doctors from having to make admittedly horrible decisions about who gets treated based on age and other factors.
We need to be mindful that the impact of crashing the economy (in order to manage the casualty rate) is that in the long term, we are at serious risk of having no money to pay for a healthcare service worth the name in the future or much else besides. And surely old people and the already sick will be the first to suffer in future as health and other services are cut.
People like Katie Hopkins were the first off the mark. On 16th March she asked whether the economic cost of the almost total shut down was worth it. She was predictably hammered online, as was Tim “Wetherspoons” Martin, who did not see a good reason to close his Wetherspoons pubs, providing social distancing was maintained in them and the pubs were frequently cleaned.
Both Hopkins and Martin were predictably savaged on social and the main media for speaking their minds.
Then, on 21st March, more people began to ask similar questions. For example, in The Times on 21 March, Matthew Parris wrote a piece, “Crashing the Economy Will Also Cost Lives – Just Like the virus, impoverishment kills, and locking down the elderly might have been a drastic but fairer solution” .
In the same edition, Philip Aldrick wrote how “There are economic consequences to saving lives on a mass scale”.
Matthew Parris asked whether, the next time a virus comes along, if we will again shut the economy to protect our very old and sick population.
Think about it – in the post World War 2 period and pre-social media and 24 hour news channels, life expectancy was maybe 15 years less than today. Back then, few people stumbled into old age with a host of conditions that we can now treat. If the coronavirus had come then, maybe the death rate, instead of being 1%, may have barely been 0.1%. Would we have even considered closing the economy with that level of death rate? The answer must surely be “No”. Should we do so at a 1% death rate, when the people who are going to suffer from the shut down most in the long term, will be those old and sick who we are so desperate to protect now?
This is a horrible equation. There are no winners. Or are there?
Coronavirus and long term health and other policies
Once this is over, surely the world must act together to close the so called “wet markets” – an abominable word – where MARS, SARS and now Covid-19 all seem to have originated. Help for poorer countries must be given, if they struggle to do this on their own. We must also educate people not to eat from the meat of “weird species”.
Back home, we must reduce the numbers of people whose “underlying conditions” have been caused by their own lifestyle choices. as this just adds to the burden in pandemics like this one. The government must support and subsidise healthy lifestyles – such as junior sports and cycling to work. My own son’s junior football team struggles for cash to survive. Government must help more.
We must ban ALL fat foods and all promotions of alcohol and gambling that saturate our media.
The government can afford to do all of this. It’s just proven that oodles of cash can be made available when needed. It must act to improve the health of the nation and it must not be deflected by the pleas of the food industry and gambling businesses.
The coronavirus winners
Fourthly, and this is very contentious indeed. Some people are asking who will be the winners from this and even whether the coronavirus was manufactured by the Americans / the Chinese / The Russians or if there are more sinister groups who will benefit at the end of all this.
I don’t know, but when the banks / governments have seized your home and the business you work for at knock down cost, the organisations who tend to be left standing, owning more assets and refinancing government debt are the merchant banks (and possibly also China, who are now interestingly (some would say, strangely) well on the way to having a fully functioning economy).
It is a worrying fact that the likes of Goldman Sachs likes to get senior people crossing over into government in other senior positions. Our Chancellor is an ex Goldman man. So is Mario Draghi, the ECB boss at the time of the 2008 crash. Interestingly, both said more or less the same words, “We will do whatever it takes…”. Their former employers will be watching on from the sidelines.
I hope these points make people think a little harder about the coronavirus and how it being presented and being tackled, whether the policy approaches are right, who stands to benefit, the role of the media and most of all the impact on your liberty. People should really be asking questions. Instead of saying that awful phrase “stay safe”, they should be asking their friends and loved ones to “stay sane and ensure that their hard won liberties are soon restored”.
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