PayProp's new report, ‘The impact of COVID-19 on the UK rental market, June – August 2020’, is our most in-depth analysis yet of the effects of the effects of the pandemic on our sector – and it is now available to everyone who wants it, for free.
Based on live transactional data from letting agencies using our payment platform across the UK, it tracks how many tenants are in arrears and how much they owe on average – and we also see how successfully agencies have responded to growing arrears bills.
While the last few months have tested all of us, property professionals have so far navigated the pandemic well – and as the report shows, it could all have been so much worse!
In this post, I’ll preview some of the findings and let you know how you can get your hands on a copy.
Crunching the numbers
Our first Special Report on COVID-19 (June 2020) painted a worrying picture. The percentage of tenants in arrears was rising quickly, as was the average share of the rent owed. By May, almost one in six were behind on their rent – and people across the industry feared it was just the beginning of an arrears spiral.
So far, that hasn’t happened. From May to June, the percentage of tenants in arrears fell again slightly and has stayed stable since then. Letting agencies – like Essex-based Griffin Residential, who we profile in the report – have been able to keep the rent flowing by communicating with tenants, issuing automated payment reminders and agreeing repayment plans.
Of these tactics, automated payment reminders have been especially effective for Griffin as well as our other clients. Of tenants who received an automatic text message or e-mail in August 2020, more than 91% paid back some or all of their arrears within seven days.
Interventions by the government, including the Coronavirus Job Retention Scheme and the increases to Local Housing Allowance, have also helped tenants to continue paying their rent – as have relaxations of lockdown, which have allowed more people to return to work.
Not all good news
The question for the industry now is how long the stabilising effect will last. Unless it is extended in the autumn budget, the furlough programme will wrap up at the end of October. Self-employed tenants will also be coming to the end of their government grants at around the same time.
With firms already announcing redundancies, we could see arrears climb again through the autumn. In fact, it may already have begun: the percentage of tenants in arrears rose from 13.1% to 14.1% from July to August. Whether this is a blip or the beginning of a trend will only become clear over the next few months – and depend heavily on what the government decides to do to help sustain tenancies after furlough ends.
The report also demonstrates some big variations between regions, both in tenants in arrears and the average amounts owed. Low national numbers won’t do much to help landlords in the North East, for example, where almost a quarter of tenants are behind on rent.