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How Has Covid Affected London Landlords?

Portfolio landlord Richard Blanco comments

Covid-19 has affected landlords in several ways this year. My most striking memory is of the anxiety that many of us experienced at the start of the first lockdown. I vividly remember tenants in my local cafe declaring that “if landlords aren’t paying their mortgages, then tenants don’t need to pay their rent, do they?” We were all faced with the dilemma of whether to pro-actively contact tenants to see if they needed help or to sit tight and hope that rent would flow in as usual. Most of the government support was going to tenants in the form of the Job Retention and Self Employment schemes plus slightly enhanced Universal Credit. The onus was on landlords getting abreast of all the schemes, so they stood ready to signpost their tenants to the best source of help. Agents devised forms to process tenants’ requests consistently and fairly. As tenants realised that they would need to propose a repayment plan for any arrears that were accrued, very few forms were returned. Meanwhile, even fewer landlords used mortgage payment holidays because of fears of its impact on their ability to raise finance in future.

A second cause of anxiety has been the changes to notice periods for eviction proceedings, the courts closure and associated moratorium. Everybody understood that it simply wasn’t acceptable to make anybody homeless at a such a difficult time. After lockdown, politicians vacillated and at the last moment postponed the court reopening date from 24 August to 21 September. Shelter predicted that 230,000 tenants were at risk of eviction, but independent research for the NRLA revealed that 95% of tenants in London were either paying rent as usual or had come to an arrangement with their landlords.  

Eviction notice periods continue to be 6 months (except in certain circumstances) until at least March 2021 and bailiffs have been unable to enforce the vast majority of possession orders from 5 November until 11 January 2021. Evictions are always a last resort but spare a thought for landlords whose tenants stopped paying rent way back in March 2020. A landlord who served a s21 notice in September can begin court action in February 2021 but should expect a 6-9 month wait to be face-to-face with a judge. Proceedings have been slowed down by the backlog and social distancing limitations. Landlords in this situation are now resorting to the small claims court to encourage tenants to pay outstanding rent or face a county court judgment, enforcement by bailiffs or deductions from their salary, not to mention the implications for their credit file.

The Central London rental market has suffered exceptionally. With the demise of international tourism, Airbnb properties have been difficult to let, so these landlords have turned to the long-term rental market. Such properties might appeal to international students, but many are absent this year and we have seen sparse numbers of young professionals and corporate renters. Central London is normally popular and bustling with office workers, tourists and people visiting hospitality venues. But with offices and venues closed, there is little incentive to be in central London, leaving the West End and City of London, until a recent Christmas surge, largely deserted. Agents report falls of up to 25% in demand and rents and advise landlords to expect void periods. We have yet to see these factors ripple outwards into zones 2-4 with popular neighbourhoods like Hackney, Ealing, Clapham and Crouch End holding up well. With their cafes and bustling boutiques, these have been good neighbourhoods to be furloughed in or to work from home. However, agents report that Docklands and less fashionable parts of zones 2-4 are seeing a drop in tenant demand.

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