As we continue to emerge from lockdown, what could be the long term effects on the residential property sector and what opportunities will there be to capitalise on.

Today, the good news is the vaccine being rolled out, while the bad news is that it is not going to be a quick fix. It will still take time for people to go about their business as freely as before Covid19, which in turn, will affect the future wellbeing of our economy.

The Organisation for Economic Co-operation and Development's (OECD) Economic Outlook December 2020 predicts

UK GDP is set to contract again in the fourth quarter of 2020 as virus containment measures are implemented, overall it will fall by 11.2% in 2020. In 2021 the UK will return to growth of 4.2% and achieve 4.1% in 2022. During 2023 the UK economy will be back to the same size it was in 2019, sounds like quite a long road.

And that

Unemployment is expected to increase even though the Coronavirus Job Retention Scheme continues to support employment.

Economic downturn and unemployment leads to more people movement.

The three main reasons are:

• Finding that new job
• Unemployed and unable to pay rent/mortgage payments leading to higher evictions/repossessions.
• Higher stress on relationships increasing marriage/partner break ups

How could this affect the property market?

The family and single let accommodation is going to be the sector hit hardest by this increased movement. As the job finders, evicted/repossessed and break ups, move on, there is likely to be an increase in family and single let rental properties available. These landlords will either accept longer voids or reduction in rent.

Property values tend to fall as more come onto the market.

The flip side is that the more flexible and better value housing will be in even more demand that it already is  – a demand that the shared accommodation (HMO) market is ideally suited to satisfy.

Good HMO landlords supply excellent quality accommodation for a great value and will benefit by reaching full occupancy even more often than they do now. It’s not to say they won’t still have the same challenges of managing tenants and collecting rent on time that they do now.

The other flexible arrangements that will see increased demand are bed and breakfast and hotel accommodation. These can be a much more expensive option or an inferior living option to match the quality and rental costs offered by the good HMO landlords.

How can you benefit from investing in or converting your present rental properties in to shared accommodation (HMO’s)

We are specialists in the HMO market, so obviously we are going to favour this sector, however the facts are now very much in favour of our sector.

There will be more property to buy that is suitable to be great shared accommodation. Invariably you can gain higher loan to values when mortgaging HMO property, enabling you to buy more with less of your own cash.

There are family/single let rental properties that are suitable to be converted into great shared accommodation.

As an investor or a landlord you may find the thought of managing an HMO daunting and off-putting. That’s the reason we developed our business model, it’s why we will joint venture with investors, why we work with landlords renting their properties to convert/refurbish and run as HMO’s.

If you’d like to take advantage of the obvious demand for HMO’s that is coming, please contact us to find out how we can work together, how we can increase your profit and grow your portfolio and how we can do this with the minimum of stress and involvement from yourselves.

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