Updated: 18th March 2020
With property prices increasing for the fourth consecutive month in February, the future lookedbright for landlords up and down the country. However, the explosion of the coronavirus outbreakwhich has now found its way to our shores has cast a huge shadow across the buy to let market, andandlords are left fearing the worst.
Letting through Airbnb can often be an extremely lucrative endeavour; however, its success relies ontwo major markets – those travelling for leisure and those on business trips. When the coronaviruscrisis first hit, the travel sector was one of the first to be impacted. Holidaymakers were hesitant toarrange trips under growing uncertainty, while businesses curtailed external gatherings in an effortto limit the spread of the disease amongst their workforce, encouraging virtual meetings andconference calls as an alternative. As a result the demand for short-term and overnight rentalsplummeted.
It is not just those letting through Airbnb that are braced for a drop income, however. Withuniversities across the country poised for potential closure, the student let market is also in apotentially perilous position. Many lecture theatres have already been closed with classes moving tovirtual environments in an effort to limit social contact between students. While many universitycampuses are still open, the future remains unclear with government intervention to close schoolsand holidays a very real possibility. With no need to remain on campus, many students are likely tomake the decision to return to the family home rendering their student accommodation surplus torequirements. Should this crisis drag on into the new academic year the prospects for studentlandlords could be catastrophic.
Additional problems could also be on the way for landlords as the government has bowed to increasingpressure to provide tenants with protection should they default on their rent at this time. Emergency legislation has now put a complete ban on evictions for both social and private renters for a period of three months. This could leave landlords in a perilous position whereby they are faced with receiving reduced income from tenants, while their mortgage payments and other outgoings remainconstant.
While homeowners have been offered mortgage payment holidays of up to three months shouldthey experience financial difficulties as a result of coronavirus, this initiative has not been extendedto landlords with buy to let properties leaving them with no recourse should the worst happen.
Compounding the problem is that no one knows for sure how long the situation will continue, norwhat the future will look like once the epidemic eventually passes. Estimates vary between experts,making it extremely difficult to plan ahead with any degree of certainty. While landlords may be ableto cope with a few weeks of vacancies, should this stretch into several months, the situation may be too much for some. With income taking a sharp plunge, yet overheads and outgoings remainingconstant, many will find themselves in dire straits and in need of professional help.
Begbies Traynor can provide expert guidance, advice, and comprehensive support to landlords whofind themselves facing financial distress as a result of COVID-19. With a network of business rescue,recovery, and turnaround experts located across the country, you are never far from specialist help.