The effects of COVID-19 began resonating through the rental market in March, with Goodlord estimating a sharp fall in new tenancies, largely as a result of the lockdown that has been in place in recent weeks.
Goodlord noticed a sharp uptick in tenants trying to sign off new contracts just before the lockdown began. This suggested that many renters were keen to speed up moves into new properties before they found themselves prevented from doing so by the restrictions imposed during lockdown.
As the rental sector transitioned into lockdown mode, news emerged over the last week that the mortgage market was experiencing a lockdown of its own, with lenders such as Nationwide opting to stop offering new loans to first-time buyers or pre-existing homeowners who had little in the way of equity.
At the time of writing, the UK is reported to have over 47,800 confirmed cases of COVID-19, with over 4,900 associated deaths, according to data from Worldometers.
Surge in rental market activity pre-lockdown
Goodlord’s Tenancy Volume Index, which compiles data on a daily basis, registered an unusually high number of letting applications up until 7th March. After this date, new lettings dropped sharply, while completed lets remained higher than during the same period in 2019.
Goodlord theorised that tenants and agents were highly likely to have been trying to complete as many outstanding applications while it was still possible.
With a sharp rise in contract completions seen before lockdown commenced, average void periods were estimated to have fallen from 19 to 17 days on average, meaning properties were empty for much less time between tenancies as a result.
Rental prices increased greatly in March, reflecting strong demand from new tenants in the pre-lockdown period, with all regions except the South West recording a rise in average rental costs.
Reasons for optimism in post-lockdown period
A large number of new renters entering the market in early March suggested strong underlying demand in the PRS, and was also indicative of the importance of agents being responsive in order to enable tenants to complete contracts in a timely manner.
Ted Mundy, chief operating officer at Goodlord, added: “As tenancies expire and contract renewals are needed, agents will continue to play a crucial role in ensuring that this process can still be handled quickly and securely.”
As the lockdown is now in effect, official government guidelines require only the most essential house moves to be allowed to take place, in order to maintain effective social distancing and therefore halt the spread of COVID-19.
Mr Mundy concluded: “While no-one knows how long the current restrictions will last and government guidance currently encourages all but the most essential house moves to be paused, we can be confident that a sharp increase in demand will be recorded in the lettings markets as soon as measures are loosened.”