COVID-19 - The effects (long and short term) on tenant demand - PODCAST OUT NOW!

I had a great discussion with fellow South London investor Areeb Azam about tenant demand in the wake of the lockdown we're under at the moment.

What is happening now? What do we predict for the future? Two real discussions in this episode: the effects on demand due to the corona virus epidemic and the longer term changes in renter demographic and what Areeb is doing to cater to this demand by using clever developing when he builds his units.

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Do stay tuned for property investment tips/tricks and updates and by all means do check out the DownToSouthLondon YouTube Channel for entertaining and informative videos to help you invest with confidence! I also offer coaching on a one-to-one basis so if you are looking to get into property investing and require personal guidance then head on over to www.jeroenhoppe.com.

What can and can't a landlord do in times of a pandemic?

So the question du jour is really - how to comply with our property management obligations (e.g. inspections, gas safety checks, and repairs) while respecting social-distancing and self-isolating tenants...???

Well, in all circumstances non-essential things should be avoided during a lockdown, such as routine inspections. If it's a major thing though like a leak (water or gas) it's best to get it seen to promptly but respect the social distancing guidelines as laid out on the government website. Engineers should be wearing PPE, distance themselves from occupants, and so on.

There's no get-out-of-jail card with expired gas safety certificates, unless you've made a good few attempts and you can't get an engineer in because a tenant is self-isolating and so forth. Keep written records in case of any comeback of course.

Repairs, well same thing really: "landlords remain legally obligated to ensure properties meet the required standard – urgent, essential health and safety repairs should be made" as per guidance on this page.

And what if tenants don't pay? Some have seen this rumour of payment holidays as an excuse not to pay, but thankfully government guidance states that ..."Tenants are still liable for their rent and should pay this as usual."


I think David summarised it all rather nicely with the following in this handy video from Vanessa at Property Tribes.

In summary, landlords need to keep up to speed with the guidance the government is putting out - daily reading is recommended. Act reasonably trying to follow these guidelines and be understanding with tenants who don’t want to allow access (there is a genuine fear factor to consider). If tenants really don’t wish to give access, then just let it slide as long as you have evidence to prove that you have done everything you reasonably could.


Do stay tuned for property investment tips/tricks and updates and by all means do check out the DownToSouthLondon YouTube Channel for entertaining and informative videos to help you invest with confidence! I also offer coaching on a one-to-one basis so if you are looking to get into property investing and require personal guidance then head on over to www.jeroenhoppe.com.

The merits of a periodic tenancy during a COVID Crisis

Well this is a short topic - there’s none!

As my colleague investor discovered when a portfolio he purchased (literally just a week before this all kicked off), statutory periodic tenancies allow a month’s notice from the tenants’ side, so basically it’s left him with a load of empty rooms which he can’t view during the notice period, and likely voids after this lockdown we find ourselves in.

You may need to refer to my previous video slamming periodic tenancies; personally I would never allow a tenant to go periodic because I want to retain control of when my properties might come back to the market. After all, I want the best returns. I want the easiest life, so I choose to let my properties during the peak (in terms of demand and hence price) of the year.

So what happened In this instance? A lot of these properties were let on a multi-let (room-by-room) basis, and as it happened they were initially let on a fixed term which had since expired, so they were are “holding over” on a month-by-month basis. Nightmare scenario for my friend since he received notice for about 6 rooms in various houses. All of these were young (younger than 25) professionals in Clapham and surrounds who found it a wise decision to move back home to their parents. I can’t blame them really, they have to work from home anyway, so their parents’ place is likely to be more spacious and since we can’t go out and see our friends or have to travel in to work it’s a great cost-saving exercise.

What about fixed term tenancies?
Well erm my stance (pro-fixed term) isn’t fool proof. I for one have a few multi-lets where some overseas nationals have returned home because they have no job at all, nor a prospect of finding a job in the foreseeable. I’m talking baristas, cleaners, labourers, retail employees. Thankfully this presents a very small percentage of my portfolio.

What does this mean for the market - bigger picture?
Well for one, all these professionals that have moved home - when life gets back to normal and people need to go back to the office on a daily basis all they will need to move back. Perhaps this will create an even higher level of demand this summer, especially the earlier part? That said a further, and longer-term, gap has been created by the lower skilled demographic, leading to less people in the market overall. However... these two types of tenants are unlikely to be chasing the same (type/priced) property.

So if you are renting out cheap and cheerful to the lower skilled you may well struggle - to get people in for one and secondly at the price that you want; even though historically I’ve found the cheaper it is the quicker it goes, regardless of quality. I think once people in first white collar jobs return the demand in that segment will settle back to normal. As for demand right this second - well it’s lockdown, people just aren’t moving at all really, not even viewing unless they’re absolutely desperate. Longer term, I foresee a significant decrease in demand for the lower end stuff due to the exodus of young, lesser skilled immigrants. This will pick up when the economy starts moving again; when will that be? The building/cleaning trade, retail etc - this will all take time to get going again. People aren’t going to be spending £3 on a coffee that frivolously in times of “austerity.” The word “recession” has already been mentioned on social media frequently, and let’s face it, it’s here - even though a recession is defined as a fall in GDP for two successive quarters.

So what will actually happen is anyone’s guess - I’m sure however we’re going to see demand come back this summer, to what extent is uncertain.

Do stay tuned for property investment tips/tricks and updates and by all means do check out the DownToSouthLondon YouTube Channel for entertaining and informative videos to help you invest with confidence! I also offer coaching on a one-to-one basis so if you are looking to get into property investing and require personal guidance then head on over to www.jeroenhoppe.com.

What can landlords and investors do in times of (Corona) crisis?

Wow, just wow. That’s the feeling I have at the moment. The world, not just the UK, has been taken by storm. Such incredible, drastic measures have never been seen before, with everywhere I look trade has been affected. Restaurants, bars, places of worship; everything has been forced to close and people are banished to their homes en masse. It’s for good reason that I’ve not spoken out as yet, I’m still taking it all in - and the letting landscape is changing on an hourly basis!

What does this mean for you as a landlord?
Financial - Well, for starters your tenants’ employment may be affected. Do they still have a job? Will they be able to pay their rent? I for one have sent out my sympathy to all tenants and asked to reach out in confidence if they have been affected, this to preempt any cash flow issues when mortgages need to be paid. To further preempt I have asked all my mortgage lenders for a payment holiday just in case I will need it further down the line, this to buffer my cash flow. I have received criticism for these in my circles, and really I noticed that people fell into two camps: on one hand they said I should use my own reserves to buffer any losses, and on the other hand some felt that the banks may as well buffer the cash flow, you’re paying for it after all (interest is added to the loan). I chose the latter because a)I don’t know what’s around the corner (tenants that are paying today may not do a month down the line and b)after hundreds of thousands of pounds of down valuations I’ve experienced I feel it’s the least the banks can do for me.

Repairs - I’ve knocked this down to bare essentials to comply with my obligations. Only drastic leaks and so on will be seen to, loose door handles will have to wait (and if you know me I will direct them to a screwdriver anyway)! Heating, hot water and so on are a priority, nothing else. We have since last week had some guidance as to gas safety certificates and the like - basically for the contractors to use social distancing measures- the tenant to stay in another room and so forth.
Communal cleaning on properties that I manage has been suspended to avoid unnecessary contact, as well as inspections.
Check-ins for new lettings are going to be done wearing protective gear and as remotely as possible the show must go on to some extent, but safety first. Government guidance insists that moves are kept to a bare minimum.

Longer term effects
Not just will tenants potentially lose their jobs today or tomorrow, trade will suffer massively as we enter into a large scale economic slowdown. We have only just started to see good movement return after the stamp duty surcharges and countless other things we’ve seen destroy the housing market (ahem, Brexit). Any business offering products and services that people don’t use as often when they have less disposable income - new cars, restaurants, luxury goods like watches, tailored suits (don’t need those when working from home!) will suffer for a long time yet. What about all the people employed in those sectors; they could be your tenants. They will have to pivot to another sector, but with little disposable income retail will suffer, the list is endless. In short, people with a job today aren’t certain of a job in 2-3 months’ time. Less disposable income will mean that rents are likely to come down also, landlords will be competing for those in employment as they become less abundant.

What can I do in the short term?
As mentioned above, I recommend that you have a safety cushion - if you feel that your reserves are lower than your risk tolerance allows then do apply for a mortgage holiday if that makes you feel more comfortable; do know that this will increase your payments slightly over time as the interest is added to the loan.

Speak to your tenants, ensure that they are happy and ask them to let you know straight away if your situation changes, giving you as much time as possible to plan things. Chances are they will be able to find a new job eventually, just realise that them playing catchup will be difficult. If you do have a guarantor in place then it’s worthwhile contacting them in order to talk about paying the rent for the person they’re guaranteeing. A fellow colleague investor has had a few tenants give a month notice (they were on a periodic tenancy, something I don’t advocate but that’s for another blog post!) and go home to their parents, leaving him with many voids - I suspect that “normal” level of moves won’t return overnight. I’m curious to see what will happen in the usual August/September rush!

So in summary, communication is the key! There’s more resources available online from RLA - https://news.rla.org.uk/coronavirus-frequently-asked-questions/ and widely on google. I don’t claim to be an expert in this new minefield we find ourselves in, but the key is to act with common sense and practicality in mind. Tenant can’t pay? Work out a payment plan. If they leave reletting will be tricky. Repair? Essentials only like gas safety and leaks. And so forth.

I hope you found that a useful update! Do stay tuned for property investment tips/tricks and updates and by all means do check out the DownToSouthLondon YouTube Channel for entertaining and informative videos to help you invest with confidence! I also offer coaching on a one-to-one basis so if you are looking to get into property investing and require personal guidance then head on over to www.jeroenhoppe.com.

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