The housing market has been a surprisingly buoyant place since spring and the start of the easing of lockdown, with prices and activity strongly higher.
The market has momentum and the big question is whether it has enough to take it through what the chief medical officer, Professor Chris Whitty, has said will be a difficult winter for Covid-19, and the inevitable rise in unemployment when the furlough scheme is phased out.
Some say not – in a new forecast the Centre for Economics and Business Research predicts that house prices in 2021 will be 13.8% lower than this year – but we shall see.
While estate agents are celebrating the bounce, landlords have not had much to cheer. Rent arrears increased during lockdown and landlords have been constrained.
At the end of August, the government announced what it described as “an unprecedented package of support” for renters. It extended the halt on possession proceedings until September 20 and introduced legislation which, except in the most serious cases, will mean tenants cannot be legally evicted until March 2021.
Many will applaud protecting tenants during the pandemic, and most landlords will see the fairness of it. But it comes on top of what they see as a series of assaults on them by Tory politicians, long before the coronavirus crisis. One of the options Rishi Sunak has been considering to meet the cost of the crisis has been increasing capital gains tax to bring it into line with income.
It is not clear if if that will make the cut for the November Budget – at the moment the prime minister is talking about “Operation Moonshot” to spend another £100 billion on mass Covid-19 testing – and the talk of tax hikes has died down a little.
In the meantime, while it has had less attention than rebound in buying and selling, something has also begun to stir in the lettings market.
The Royal Institution of Chartered Surveyors (RICS) latest residential market survey, published on September 9, showed what it described as a sharp rise in tenant demand, alongside broadly flat landlord instructions. These, having picked up since lockdown, appear to have flattened out.
The result, according to RICS, is a strong rise in rental expectations among agents.
As it put it: “Rental growth expectations over the near term have now strengthened in each of the past three months, with a net balance of +31% of contributors now anticipating an increase (+22% in July).”
Hamptons International, in its latest monthly lettings index, noted a new post-lockdown phenomenon, which is that working from home has produced a demand for extra space among tenants.
According to Hamptons, 34% of tenants moving post-lockdown have added at least one bedroom to their new property, and the average “upsizing” renter has paid 23% or £149 a month more in rent. This trend is strongest in the South East, with 47% of tenants looking for more space, followed by the North West (37%) and London (33%).
“Renters have joined homeowners in the race for space by rushing to the suburbs where the number of tenants looking to rent is up on last year,” said Aneisha Beveridge, head of research at Hamptons International.
“With tenant’s priorities changing, upsizers have swapped smaller city centre flats for three-bed semis on the fringes of town. While the premium placed on green space is growing each month, upsizing tenants have typically stuck to the outskirts of cities they know rather than leaving altogether.”
This is not reflected yet in rents, according to Hamptons. It found that average rents across Britain in August were 0.5% lower than a year earlier, led by a 3.9% fall in London.
There was also a 0.8% fall in the South East and 0.1% in the East of England, though there was strong growth in rents in the South West, up 3.6%, the Midlands, 2.6%, the North, 2.5% and Wales, 3.9%. There is quite a lot to play for over the coming months.