What is the impact of Coronavirus on the Private Rental Sector?

21/04/2020 By Mark Long

Register below to view our webinar with Mark Long (Director, BVA BDRC) and Chris Norris (Director, NRLA)

20% of the population lives in the UK’s private rental sector. These are properties owned by 2.5m private landlords, managing everything from a single flat to portfolios of hundreds of properties. It’s generally acknowledged that the housing market would fail without the property stock offered by this army of private bricks & mortar investors.

The Coronavirus pandemic has, of course, affected the great majority of landlords. We undertook 850 interviews for our latest Landlords Panel research in partnership with the National Residential Landlords Association, revealing the nature and scale of the impact. Our special mini report can be downloaded here. The headlines are compelling:

  • Over 8 in 10 landlords have already been negatively impacted, with over a half significantly affected
  • Landlords with larger property portfolios are reporting the most adverse impact
  • Those with buy-to-let mortgages are feeling the impact more than their unleveraged peers
  • London-based investors are hurting most compared with other UK regions
  • Those actually self-employed as landlords are hardest hit

Anxiety about income and liquidity is affecting landlords and tenants equally:

“My properties attract low wage earners whose work is not vital from a commercial point of view and I fear these will be the ones who will struggle or fail to pay their rent. My 3-4% gross yield offers little comfort for me even in good times, but without that vital source of revenue, my income will be halved, yet I shall still have service charges and maintenance costs to cover.” [Landlord]

“Negotiating a rent decrease with our landlord today to match the pay cut I'm taking and the loss in earnings my self-employed partner is taking. Will go in with an open mind but expecting the worst.” [Tenant]

“The tenants are sending messages that they can’t pay rent for the next few months. As a landlord I am panicking as I don't know what to do. I want to be compassionate but I have 5 HMO’s and I pay the bills, mortgages and running costs for these properties. If my tenants stop paying rent how am I supposed to keep up?” [Landlord]

“Help! Housemates want to move out due to lack of income and crazy Covid. Obviously unable to get new tenants during lockdown. Landlord won’t break tenancy because I wish to stay but can’t pay rent in full.” [Tenant]

When landlords look ahead to the end of the outbreak, a significant proportion expect to have experienced financial hardship to some extent, and around 5% (or 125,000) landlords expect to lose their businesses completely as a direct result of Covid-19.

Landlord response to COVID -19

However, there is a strong degree of resilience baked into the sector.  A quarter of landlords are financially insulated through income from other sources, and the same proportion predict Coronavirus will have little impact on their business if the crisis ends when anticipated.

Please talk to us if you’d like to know more about landlords’ attitudes and coping strategies in these turbulent times.

Please complete the form below to receive your copy of our special Landlords Panel report: