PRS pandemic impact report

As 2021 draws to a close, Belvoir’s pandemic report reveals the impact of the Coronavirus pandemic on the UK rental market.

“Earlier this year Belvoir commissioned property expert Kate Faulkner to review data from the Belvoir rental index as well as quarterly surveys of offices during the pandemic and beyond. This information has been used to create a unique pandemic report,” says Belvoir CEO Dorian Gonsalves. “The Belvoir pandemic report provides a unique insight into the rental market during this challenging time and looks at how it affected landlords and tenants.

“Belvoir’s data confirms that offices generally saw a dip in average rents during the pandemic, and that this trend has been reversed in 2021. There are significant regional variations in rents – not just due to area, but also on whether the let was a flat, house or HMO, all of which resulted in different experiences for landlords and tenants.

“During lockdown, rents for flats mostly remained static, or fell in value when compared to pre-lockdown. The reopening of the market in May 2020 impacted on the second half of the year results, and most rents for flats rose. In contrast, and similar to the house price market, house rents have been consistently increasing in most areas and continued to do so even during the first lockdown. Belvoir’s Q2 rental index revealed that 95% of offices reported a rise in rents for houses, and 83% reported a rise in rents for flats.

“Belvoir’s survey analysis shows that although the pandemic has had some impact on the lettings’ market, overall, this was much less than would have been anticipated. The lettings’ market proved itself to be incredibly robust for those renting and letting through Belvoir. Unsurprisingly, many tenants stayed put during the pandemic, but coming out of lockdown during quarter 2, tenant trends began returning to normal.

Rental arrears
“Belvoir offices apply stringent tenant referencing, so rent arrears have historically been few and far between. Pre lockdown, most offices had either zero or no more than three tenants who were more than one week in arrears. This figure jumped during the pandemic, but the trend had already started in Q1 2020 where most offices were dealing with 4-10 tenants in arrears.

“This trend continued through to Q1 2021, but in Q2 2021 we saw trends of less than three tenants in arrears, suggesting this was a ‘blip’ that occurred during the pandemic.

“Belvoir’s data shows that from 2019 the majority of offices rarely evicted any tenants, a trend that changed little during the pandemic. There was an increase in Q4 of the percentage of offices reporting zero evictions, but now that evictions are once again able to proceed, there has been a ‘catch up’ in Q2’s data, and the percentage of offices not evicting anyone fell from around 80% to just over 60%. However, most Belvoir offices are still only evicting two-three tenants, with a fraction evicting four or more.

Offloading properties
“Belvoir’s data revealed an increase in the number of landlords selling properties from Q4 2020 versus pre-pandemic trends, but this was probably due to the lack of landlords selling in the first lockdown. During this period, 90% of offices saw less than three landlords selling up and the highest proportion of zero sales for nearly 40% of offices. Comparing Q1 2019 to Q2 2021 when the country opened up further, the proportion of landlords selling up seems to have returned to normal. Overall, it does not look like Belvoir landlords sold up due to the pandemic.

Pandemic purchasing
“Unsurprisingly, the number of landlords buying properties dipped during the first lockdown. As the market reopens, landlords have strongly returned to the market. During Q1 and Q2 few Belvoir offices reported zero landlords buying, most saw 6-10 purchasing new stock, and in the latest quarter, for the first time in a while, a small proportion of offices saw 11+ landlords buying new tenant stock.

“Overall, from a lettings’ metrics basis, it appears that although there were some changes during the pandemic, in the main, long-term trends have returned to normal. The pandemic certainly changed how Belvoir offices ran their businesses, with communication, problems doing inspections, and difficulties getting reputable contractors to carry out maintenance work cited as the main problems. However, offices were quick to respond, employing advanced technology with virtual viewings, and teams pulling together to provide as effective a service as possible.

“Despite the government’s efforts to encourage more people to buy, many tenants prefer to rent properties to achieve a much more flexible lifestyle. It is clear that the lettings’ market survived the impact of the pandemic incredibly well, which is good news for investors.”

To review Belvoir’s pandemic report in full, visit: https://www.belvoir.co.uk/rental-index/

To review Belvoir’s Q2 rental index visit: https://www.belvoir.co.uk/rental-index/

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