When the Coronavirus pandemic hit the UK in March this year, the ensuing restrictions and economic upheaval impacted the numbers of tenants making moves in the rental sector. From March until the middle of June, only essential moves were permitted and the number of new tenancies dropped considerably. There was a flood of properties onto the rental market caused mainly by tenants vacating properties at short notice and these previously tenanted properties becoming vacant and going back on the market for re-letting. There were also a number of properties that were previously rented for holiday use and the Edinburgh Festival that were switched over mid-lockdown to be advertised on the long-term letting market.
The average void period reached almost 3 times 2019 levels
At Umega, our average void period (the number of days a property is empty between tenancies) shot up when the effects of the pandemic started to cause behavioural change in the market, and grew to a peak of almost 55 days in April, much higher than our average void of 17 days at the same point in 2019. Since April our average void period has gradually dropped back down to return to that of September 2019 (around 5 days average void).
Why did void periods increase during lockdown?
During lockdown, in order to prioritise staff and customer safety and inline with government advice, we advertised properties once we could safely enter properties that had been vacant for 3 days and cleaned. We then shot a marketing video for the purpose of “remote/virtual viewings”. Pre-COVID, it was standard practice for us to advertise properties while the existing tenancy was coming to an end (at least 28 days notice), meaning void periods were much lower due to new tenancies being agreed in most cases before the previous tenancy came to an end. Another reason why void periods increased is that it became more difficult to deploy available contractors and cleaners to prepare properties for new tenancies. This was because many of these small firms closed temporarily or down-sized with many of their employees on furlough.
The time taken to find new tenants has, surprisingly, remained low
With all that’s happened in the rental market this year, we would expect that the length of time a property is on the market before a suitable tenancy is agreed – the “Time to Let” (TTL) – would have also increased. On the contrary, when we compare this year’s TTL periods against our 2019 data we see the surprising trend that shows TTLs this year are in line with the way the market performed in 2019.
This indicates that the Edinburgh rental market has continued to follow previous year’s trends caused by a significantly higher demand from prospective tenants compared to the supply of quality rental property in the city.
Putting the voids and TTLs trends together
Despite seeing void periods spike earlier in the year and decrease back to normal levels by September, the average Time-to-let has remained constant throughout the year. This demonstrates that the Edinburgh rental market has been resilient during the most challenging of years. The various delays caused by COVID restrictions and their impact on the economy has slowed the market down temporarily but the underlying performance of the market has remained strong and the key metrics have recovered much faster than we expected.