How will COVID-19 impact on the property and investment market?

At Gaddes Noble, our award-winning property team have a wealth of knowledge acting for investors and property buyers.  Whether you are thinking of buying a new home, a landlord with a property portfolio, or thinking of buying a commercial property, our specialist Property and Investment Team have the knowledge to guide your though the process, always providing you with a bespoke service.

Our Managing Director, Lee Gaddes, heads up our award winning Property and Investment Team, we asked Lee how he thinks the property and investment market will change over the next 12 months, given the impact that COVID-19 on the economy?

“COVID 19 has already impacted the conveyancing market over the last 3 months. Zoopla saw a 40% drop in website traffic once lockdown was enforced. However, since the relaxation of the lockdown in the last few weeks, there are reports of an 88% increase. Things are looking up for the property market. The market has adapted well to the social distancing guidelines, estate agents are offering online video viewings so it is pretty much business as normal for estate agents and conveyancing practices. Gaddes Noble invested in a world leading case management system and internet-based telephone system before lockdown, so it has been business as usual, albeit working from home. While things have been quieter, this has offered us the opportunity to prioritise our current instructions, so they were ready to proceed as soon as lockdown measures were lifted”

“We are however, seeing a change in motivation within the market. Some buyers are feeling the pressure to complete sales quickly, mainly due to the uncertainty with the value of their properties. It is anticipated that there will be an increase in what we call distressed sales, where sellers have no alternative but to sell quickly and sometimes at an undervalue”.

“There can be a number of reasons for the shift, with 8 million presently on Furlough and businesses struggling, it is likely that some number of those will be facing redundancy towards the last quarter of the year as furlough comes to an end. From an investors point of view, this will mean more properties coming to the market which are likely to be sold at an undervalue. Investors traditionally look for a yield from investment properties of between 6-10%. With the current Bank of England interest rate of 0.1% it is likely that more savers will come to the property investment market than before. There have always been opportunities for investors in good and bad times, but uncertainty can offer more opportunities. Unfortunately, when individuals find themselves in economically challenging times and unemployment rises, we see an increase not only in distressed sales and auctions, but also an increase in demand for rental properties. Investors are likely to seize the opportunity to purchase properties at an undervalue and increase their income yield”

“It is also envisaged that we will see an increase in those looking to buy larger homes. Those in a position to upsize will now do so, having spent a considerable amount of time at home and with continuing uncertainty as to how the pandemic will affect our everyday lives for some time. Buyers are considering larger homes, with the need for a home office and more outside space. This will further increase the number of small properties to the market, an opportunity not only for investors to increase their portfolio’s but also smaller less expensive homes for first time buyers”

“Letting agents have recently seen a resurgence in the Buy to Let market which is presently seen as buoyant. However, there will be issues for some landlords who currently have tenants not paying rent or paying less than their contractual rent amount. This is unfortunately storing up issues for later this year, it is likely there will be a significant number of tenants being evicted and moving home, distorting the number of new tenancies. Landlords are already facing financial pressures, which will no doubt lead to them seeking more financial security from new tenants either by charging higher rents and/or deposits”

“The recession of 2008 saw the property market contract for a considerable length of time; however, this was in the main due to a near collapse of the banking system. COVID-19’s impact will be different, economists suggesting that we will experience a U shape recovery to the pandemic, meaning recovery will be quicker than we saw during the 2008 financial crisis. Although we expect that transactions levels in 2020 will be lower than 2019, its is hoped that by 2021 transaction levels will to return to near normal”

Gaddes Noble Property Lawyers have been working hard doing their best to keep the property market moving. If you are thinking of buying a home or an investment property, get in touch with our experts who are here to guide you though the process and provide you with advice even before you have found your perfect property.