I hope everyone had a reasonable Easter break, despite the doom and gloom that’s hanging over everyone thanks to this horrible pandemic, and that you are all safe and well. The Easter period for us was very quiet for both sale and rental enquiries. There were a couple of maintenance issues raised by tenants, which we were able to deal with on Saturday, for which our tenants were very grateful not to have to wait until after the Bank Holiday. Obviously, our tenants and contractors are working within the strict social-distancing guidelines to keep everyone safe.
With no new sale or rental transactions being negotiated, it’s now impossible for me to judge which way the property market is moving, if it’s moving at all. Both sale and rental values were rising pre-pandemic but we’ll have to wait and see how things look once we’re out of lock-down and we’re allowed to do viewings once again. I know there are a number of agents generating offers off the back of video tours but the research we’ve done indicates that buyers and tenants will still require a personal viewing of the property prior to commitment. To me, this is what any prudent buyer or tenant would do therefore the video tour concept doesn’t really ‘close a deal’ like a personal viewing does. Seems a lot of work and excitement for very little, if any, gain.
What has been interesting from the sales enquiries we have received recently are the number of overseas investors expressing an interest in buying property to rent-out in Leeds. These are not investors just interested in student properties in Headingley and Hyde Park, but buy-to-let investors looking at studios, flats, and even family houses. Although none have admitted to me their new-found enthusiasm for buy-to-let is due to the volatility in the stock market, I suspect that will be an underlying motivator for many. The FTSE 100 has dropped 26% since the pandemic started, which has wiped off a substantial amount of the gains made in recent years. Although we won’t know what’s happened to property prices until trading recommences post-pandemic, the investors I’ve been talking to clearly feel that bricks and mortar will be the better home for their funds going forwards.
The FTSE 100 appears to have found a new level around 5800 (much better than the 4500 forecast by one pundit my broker knows) and the pound seems to have strengthened against the dollar (around 1.25 compared to 1.14 mid-March) which can only be encouraging given the fact both sides of the pond are still in lock-down, and likely to remain that way for the next few weeks.
We all need somewhere to live, therefore even if the residential sales market takes a hit from a sudden increase in unemployment and an uncertainty over job security, longevity of employment, business survival, etc. the rental market in Leeds is likely to remain buoyant. As we’re still getting rental enquiries I can see no reason for rents to come down. I appreciate some estate agents are having issues with large numbers of tenants seeking payment holidays (especially students in university owned accommodation) or repayment plans for unplanned arrears, (which of course hits the agent’s commission and profitability). This once again reaffirms the recommendation I have been making to clients for many years, in that it is not only the type of buy-to-let property that’s important, but also the location and profile and quality of tenant the property will appeal to. I am pleased to say that less than 1% of our tenants have asked for a payment plan due to the loss of their job or a reduction in their working hours. In all but two cases the tenants have reasonably and honourably entered into a plan to pay off the arrears created by a ‘rent holiday’. This is very encouraging and if managed correctly could well create a very strong, long-term, landlord/tenant relationship going forwards.
I will keep an eye on the market as always, and update you again shortly.