The Scottish Government is planning to announce a move to phase 2 of lockdown restrictions on Thursday this week (18th June). This will mean the “reopening” of the housing market and buying and selling homes can restart. This is going to create movement in the home buying/selling market and have a knock on effect in the private rented sector.
The rental sector has kept moving
The rental sector’s swift shift to using video viewings has meant the rental market has been active during lockdown (unlike home sales where buyers will not usually buy a home from viewing it via video). Over the last few months, letting agencies have safely adjusted their practises and prospective tenants have quickly adapted to the new way of finding a home. While some tenants have had no option but to move during lockdown, others have been happy to commit to new homes and to hold off moving until restrictions have been relaxed. We have 60 tenancies signed for properties where tenants will move in over the coming 6 weeks.
In terms of tenant enquiry levels, activity in the market has gradually increased throughout lockdown and we are now back to pre-COVID levels. At the beginning of lockdown, enquiries were as low as 6-7 a day, however interest has gradually built and over the past week our average number of tenant enquiries has been just over 70 per day. We expect this to increase over the coming week, following Thursday’s changes to restrictions.
Delays in remarketing properties
Due to the disruption to people’s lives of the COVID pandemic, a large number of private tenancies have come to an end which has meant a large number of properties coming back on to the rental market to be re-let. Getting properties ready for re-advertising has presented a significant challenge for letting agencies during lockdown since many cleaners and contractors have halted trading. There have been long wait times on cleaning and refreshing properties before they can be filmed and readvertised via video viewings, in some cases as long as 6-7 weeks. Turnaround times are improving but we expect delays in this area for as long as we are working under restrictions.
High volume of properties on the market
Despite delays, the supply of properties on to the market has so far outweighed the demand from prospective tenants. The number of properties advertised on the rental market in Edinburgh is more than double this time last year. There are 2,549 properties on the market on Rightmove today, compared to 1,267 on this day last year.
Rents are slightly down
This means that currently properties are renting for a slightly lower rent level than we would have expected if COVID had never happened (around 5% down). The length of time that rents will remain slightly down or flat depends on how long there will be more properties coming on to the market than properties being taken off (when a new let is agreed).
Over the next few months, we expect the number of new tenancies to overtake the number of new properties which will bring the volume of properties on the market back down. We also expect a number of new landlords to enter the market as a result of difficulty with selling their previous home when they move (similar to what we experienced in 2008). We are also prepared for more tenancies to come under pressure when job losses increase as a result of the furlough scheme winding down.
Watch this space.