Another month in lockdown and the pressure is yet to tell on landlords, lenders and the property market. Whilst volumes of sales have hit the floor, the artificially-propped-up economy is holding out. People (or investors…) are still buying property (or at least reporting to) and there are no major drops in value in our investment area.

But there are a few reasons for this; the main one is that many people are still furloughed and are yet to return to work. Unemployment is about to hit record levels – and for many it will be unexpected. There is due to be an extended period of economic depression – due to job losses but also due to a lack of spending power in the economy as a whole.

Rental demand

Rental occupancy may have been had a bounce due to the high levels of people needing emergency residence (either due to relationships breaking down, needing to isolate or otherwise) but my guess is that these levels may drop in the coming months.

A lot depends on how many businesses make redundancies – we are starting to see early figures from some large employers which are in the thousands. More information is likely to come out during this month as work steadily returns to normal and the level of demand is seen to have dropped more than businesses expect.

What are lenders doing?

Pulling out of high LTV products and demanding more deposits for properties. This is an indication of their perceived risk of the direction of the property market in the next 2-5 years.

Mortgage rates over the last month have decreased (despite the initial increase in May) – this really favours those with available capital to purchase property at a very cheap price. Its these people who will be looked upon to restart the property market with purchases.

Greedy Councils

Councils are still on the prowl for extra income by pressing ahead with additional HMO licensing despite landlords unable to get contractors out to properties. This optional legislation could have been delayed given the circumstances – and I have already seen a number of landlords selling due to the shear amount of paperwork required on top of the extortionate fees.

Councils need to be careful to not alienate landlords altogether – a social housing problem is on the horizon and they may need the help of the private rental sector to contain the issue.

What to expect this month

More businesses going under; more commercial property to become available – a large number through auction. More lenders retreating from the higher LTV products and refinances taking longer and longer.

Overall the market is coming to a slow grinding halt – and it looks like the cards are firmly in the hands of those with some capital.