Holiday lets may re-open from July 4th
- Published: Tuesday 09 June, 2020
- By: Nicola Eaton
Culture Secretary, Oliver Dowden, brought very good news to England’s holiday let landlords, as he announced in the House of Commons that the industry may re-open as soon as July 4th.
Dowden made clear his intention to meet the July target, subject to safety around the Coronavirus:
“As the Prime Minister has said, we have set this very ambitious target to try and get the sector back by July 4, so long as it is safe to do so, and I am working to make that a reality.”
Mr Dowden went on to add that:
"Self-let accommodation has a lower risk, so I would hope that is at the front of the queue."
Whilst safety plays the greatest role in what will actually happen, both holiday let landlords and the general public en-masse, will undoubtedly be delighted to hear this news.
Government to invest in staycation campaign
The discussion in the Commons also highlighted that staycations will be at the top of the government’s agenda.
Mr Dowden shared that the government will be “investing extensively” to promote British holidays, particularly in seaside towns where research shows employees have been losing jobs "at the fastest rates of any areas of the UK”.
Tim Loughton, MP for East Worthing and Shoreham, asked the Culture Secretary whether hospitality venues – especially those with outdoor spaces – could re-open. He also called for a 5% reduction on the VAT rate for tourism.
Dowden said he would be working with the Chancellor, Rishi Sunak to implement further measures to support the hospitality sector.
Could pubs and restaurants re-open from 22nd June?
Further news from the hospitality sector is that a group of cabinet ministers may be reviewing the possibility of re-opening restaurants and pubs from 22nd June, in a bid to save jobs.
However, concerns have been raised as to the ability for establishments to be ready in that timeframe. Emma McClarkin, chief executive of the British Beer & Pub Association (BBPA) said:
“We’ve always wanted to reopen our nation’s pubs safely and viably as soon as possible, but we urgently need a clear decision on whether we can reopen pub beer gardens early”
The plans to re-open from the 22nd originate from chancellor, Rishi Sunak and five other cabinet members nicknamed the “Save Summer Six”. The issue is to be debated on Tuesday 9th June.
22% surge in rental demand
Rightmove has reported a 22% year on year increase in demand for rental properties, in May 2020. This currently outstrips the demand for property sales.
Not only this, but the requirements of renters have also changed considerably, according to a survey of over 4,000 people moving home and Rightmove website data.
Coronavirus lockdown rules have hit those people without outside space at their home, hard.
Renter requirement changes, since lockdown
For nearly 60% of renters, the desire for a larger garden, or access to a garden, has become the priority. 41% want a bigger home and 29% want a pet-friendly home.
Access to garden space is not the only expression of desire for outdoor space. 27% of renters now want their home to be closer to parks and green spaces.
The need to be closer to work is much further down the list of priorities, at 13%.
This may suggest that the restrictions of lockdown have highlighted to some that a slightly longer commute might be worth the compromise, if it means gaining a garden or outdoor space.
Bigger garden or access to one
A bigger home
Live in a pet-friendly home
Live closer to parks & green spaces
Access to a parking space or garage
A better home workspace
Live closer to friends & family
Live closer to essential local services
Live closer to non-essential amenities
Live closer to work
Want to live in a rural area
Impact on working from home
49% of people surveyed by Rightmove said they were working from home amidst Coronavirus. 21% said they would like this to continue after lockdown eases.
A further 55% of people surveyed said they would like to increase the amount of time they work from home, but retain some time in a work environment.
Certainly, for businesses having successfully set up home working, there may be an opportunity to save on commercial letting space, by eliminating or reducing the size of the offices they occupy.
Having a suitable place at home to work comfortably, may therefore contribute to the desire for larger homes amongst renters.
Rightmove compared most sought after property types over time:
2 bed house
2 bed house
2 bed house
2 bed bungalow
1 bed house
1 bed house
3 bed house
3 bed house
3 bed house
1 bed house
2 bed bungalow
1 bed flat
3 bed bungalow
Property investment considerations for the future
The Coronavirus pandemic has affected almost every area of life. It has changed the way people view how they want to live and what their living environment priorities are.
The data above makes clear that demand is showing early signs of a return to normal and that outdoor space, whether at home or in the locality, has naturally become more of a priority.
Working from home may well be a rising trend within daily life. Therefore, a viable space for work and decent internet connectivity throughout a property might be features worth revisiting if they are currently lacking.
The desire to secure more a more favourable living space, supplements a desire for greater freedom of movement.
Whilst the holiday let market has been hit hard during lockdown, there is a huge pent up wish for a break from life, as we know it.
UK based holiday lets are likely to experience a massive surge of interest, as soon as government rules change. It is inevitable that any easing of freedom of movement are far more likely to be for domestic rather than foreign travel.
Landlords looking to invest in property can still benefit from exceptionally low rates of borrowing and at up to 80% loan to value.
With the base rate slashed to almost nothing, savings currently offer little return.
That being the case, some might argue that a fresh look at the yields possible in bricks and mortar might be a very deserving one.
Buy to let products up nearly 20% MoM
Buy to let lenders continue to come back into the market and make favourable changes to their products with every new day. The increase in the number of products between May and June is just over 19%.
Financial data group Moneyfacts has released its analysis of the buy to let mortgage market, with good news on two counts for UK landlords.
Two areas of improvement
Not only have the number of products increased month on month since May, with an additional 280 fixed and variable rate deals becoming available but, the rate average for 80% loan to value deals has come down.
Over a two-year initial rate period, average 80% loan to value buy to let rates have decreased by 0.49%. Over five years the average rate has dropped a little more, by 0.67%.
Buy to let mortgages by number of products
Both fixed rate categories are up by 22% and 26% respectively, but the impact of variable rates have brought the average increase in products to just over 19%.
|Two year fixed rate BTL all LTVs||491||597||106||21.59%|
|Two year fixed rate BTL at 75% LTV||165||211||46||27.88%|
|Two year fixed rate BTL at 80% LTV||9||35||26||288.89%|
|Five year fixed rate BTL all LTVs||480||607||127||26.46%|
|Five year fixed rate BTL at 75% LTV||176||230||54||30.68%|
|Five year fixed rate BTL at 80% LTV||6||26||20||333.33%|
|All buy to let mortgages (fixed and variable)||1455||1735||280||19.24%|
Average buy to let rates
|Two year fixed rate BTL all LTVs||2.51%||2.59%||0.08%|
|Two year fixed rate BTL at 75% LTV||2.60%||2.64%||0.04%|
|Two year fixed rate BTL at 80% LTV||3.61%||3.12%||-0.49%|
|Five year fixed rate BTL all LTVs||2.94%||3.03%||0.09%|
|Five year fixed rate BTL at 75% LTV||3.15%||3.17%||0.02%|
|Five year fixed rate BTL at 80% LTV||4.32%||3.65%||-0.67%|
Whilst there appears to be a modest increase in the average rates across both initial rate periods, it is speculated that this may be the result of the volume of new mortgage products entering the market bringing the average up.
Have valuers caught up the back-log?
With good and improving news on product choice, another key aspect to drive momentum in the industry is valuations.
We are now 4 weeks on from the date physical valuations resumed. Jill Pyke, head of account management at Commercial Trust had this update on the current position:
“Lenders and valuers have told us that they are committed to getting back to full capacity as soon as possible. We have been told that any outstanding valuations will be booked in by the end of this week.
“Certainly we have seen early signs of the cogs starting to turn and are monitoring the situation daily. I expect to see further improvement in a matter of days, not weeks.”
Eviction ban extended to 23rd August
Housing Secretary, Robert Jenrick has dealt a blow to some UK landlords, by extending the eviction ban by another two months, to 23rd August 2020.
The announcement was made on 5th June and affects England and Wales.
Jenrick made the following statement on the decision to extend the ban:
“We have provided an unprecedented package of support for renters during this pandemic. Today, I am announcing that the government’s ban on evictions will be extended for another 2 months. That takes the moratorium on evictions to a total of 5 months.
“Eviction hearings will not be heard in courts until the end of August and no-one will be evicted from their home this summer due to coronavirus.
“We are also working with the judiciary on proposals to ensure that when evictions proceedings do recommence, arrangements, including rules, are in place to assist the court in giving appropriate protections for those who have been particularly affected by coronavirus – including those tenants who have been shielding.”
Where landlords were part-way through initiating an eviction before the Covid-19, for reasons unrelated to the pandemic, this will be particularly bad news.
Landlords are still obligated to cover the costs of their property in terms of any management fees, maintenance and health and safety.
Mortgage holders may have the option to take a mortgage holiday, but if they do, the impact that will have on their future borrowing may be significant.
Some buy to let lenders are unwilling to accept applicants who have taken mortgage holidays. This means that, when it comes time to remortgaging their property, the number of lenders from which deals can be secured may be narrower.
Sim Sekhon, managing director of Legal for Landlords, highlighted some of the negative consequences landlords may face:
“Some operating on the buy-to-let-model may have the comfort of a mortgage payment holiday, but many others are retired individuals whose income from property rental is effectively their pension.
“Often these landlords cannot access other forms of support.
“Of course, the situation is doubly hard for those landlords who may have been struggling to get tenants to pay their agreed rent long before the crisis hit.”
Mr Sekhon also shared concern over the possibility of more extreme action by some:
“There’s no doubt in my mind that some tenants will use the pandemic to avoid making payments they could manage, knowing full well that landlords have no redress, and that a backlog in the courts will give them further opportunity to avoid payment.”
Tenant groups maintain that extending the ban merely delays a problem that will still happen – a significant number of evictions.
Chief executive of Citizen’s Advice, Dame Gillian Guy said:
“Simply extending the pause of repossession is a sticking plaster not a cure. People who have fallen behind on rent arrears and those who have been furloughed or lost their jobs will need the security of proper reform to the rules governing evictions.”
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.