By: Neil Chatterton, Managing Director, Caxtons
Managing Director Neil Chatterton has been reviewing the future of property investment.
There is no doubt that the lockdown measures, instigated by the government in response to the Covid-19 pandemic, have had a significant impact on property investment - particularly in the high street retail sector.
Commercial landlords have suffered at the hands of the some of the larger multiple retailers in particular, some of whom have not paid any rent since March despite having now been open and trading again for the past 3 months. Others are looking at or threatening landlords with CVAs if they don’t agree to reduce rents or a move to turn-over rents. When these are instated, lower rents can be forced on landlords as well as arrears effectively being written off or reduced.
Other sectors are however doing better. Industrial property remains in demand, convenience stores are doing well and some
The demand for offices is likely to reduce as more companies agree an increased level of working from home. However, parts of workplaces are likely to be re-purposed once the pandemic is over and used more for meetings, team building exercises and the like. The sector may also present opportunities for more residential conversions as a result of permitted development rights, which have recently been extended, now also allowing retail properties to be converted to residential.
The property sector has faced challenges before, but in the longer term it will no doubt adapt, evolve and remain attractive to the financial institutions.
For the past 8 years, Caxtons has been engaged in compiling the annual Kent Property Market Report (KPMR) (2013 – 2020), and has provided the data for the Ashford Property Market Reports.
By Debbie Pennell
Having once extended emergency measures to prevent tenant evictions during the darkest days of Covid-19, the Government has come under pressure from all sides. Originally due to end on 30th June, the eviction ban was extended to 20th September. Now, the ban has been lifted and, where appropriate, landlords are able to take eviction proceedings against tenants.
The opposition party, industry, charities and Baroness Ros Altmann, a former pensions minister under David Cameron, have different and often conflicting agendas, but have all had their say on the matter.
Landlords, their representative bodies and Baroness Altmann were all concerned that if the eviction ban been extended, they, together with other restrictions imposed, would deter new entrants to the private rental sector (PRS), encourage many to leave the sector and impact others who use their buy-to-let investment as a source of income.
Their argument was that although a blanket ban on evictions would benefit those in genuine need, it had the unintended consequences of helping those difficult, anti-social, or persistently non-paying tenants who take unfair advantage of their landlords.
In addition, many landlords are dependent on their buy-to-let income for day to day living, or as part of their pension pot, potentially supporting drawdown funds. An extension of the ban would have impacted them by default, and would have caused knock-on, unplanned hardship.
Although the courts are now opening their doors to eviction cases, the backlog is predicted to be long. So, there is no quick fix.
When criticising a potential further extension to the ban, Baroness Altmann suggested a number of other measures that could help tenants in Covid affected areas who found themselves in need. These include interest-free hardship loans guaranteed by Government and paid
Conversely, charity Shelter say that since the beginning of the pandemic 322,000 tenants are in arrears. They are concerned that resulting evictions will increase homelessness and propel a rise in coronavirus. Also, the end of the furlough scheme in October can only push unemployment figures upwards making matters worse. Government opposition voices have been heard in support of this sentiment.
Meanwhile, some sector experts think that in extreme circumstances, unscrupulous and potentially criminal landlords could be planning to illegally evict some tenants, reminiscent of the Rackman 1950/60s era.
In the main, landlords have welcomed the reinstatement of evictions, although for tenants who have found themselves in arrears due to reduced working hours, job losses, illness or depleted income - all at no fault of their own - are feeling let down. They had been hoping for a further deferral of the inevitable, but it seems the Government has decided the country must learn to live with Covid and that it is essential life resumes some semblance of normality.
In order to introduce fairness into this difficult situation, the National Residential Landlords Association (NRLA) is encouraging landlords to continue working with any tenants experiencing genuine financial hardship, and to arrive at a mutually acceptable payment plan. In short, this will benefit both parties, averting the possibility of homelessness for the tenant and voids for the landlord – not to mention the expense of eviction through court proceedings.
However, in anticipation, courts are preparing for a flood of new cases and there is talk of prioritising cases such as those with 12-months of unpaid rent or, in some cases, where the outstanding funds amount to 25% of the landlord’s income. In addition, cases of illegal occupancy,
Finally, and in an attempt to avoid at least some potential disputes, Landlord Action and Property Redress Scheme together are offering a cost effective mediation service to avoid eviction proceedings. This should enable letting agents and landlords regain possession in a more timely, non-judicial manner, rather than immediately resorting to the courts.
Caxtons has advised both landlords and tenants to keep lines of communication open and, wherever possible, arrive at consensus. As a consequence, during the pandemic we have had a couple of cases where the landlord and tenant have agreed to a reduced rent, but only the rare occurrence of rent arrears.
by Neil Chatterton : Managing Director, Caxtons Chartered Surveyors*
Eurostar has announced it will operate a non-stop service from Europe to London St Pancrass and will not reinstate the Ashford and Ebbsfleet International station stops en route until at least 2022. This has dismayed me, and all my colleagues at Caxtons.
Eurostar removed these stations from its schedule back in March, but attributed their recent decision to extend to 2022 due to a 90% fall-off in bookings since Covid-19 and lockdown. Travellers will still be able to reach destinations in Kent, but not without effort and lost time, using High Speed-1 (HS1) trains to Ebbsfleet and Ashford.
A primary and obvious victim is tourist traffic, especially with quarantine restrictions already a major disincentive for travel to the UK.
However, another casualty of Eurostar’s decision will be towns such as Ashford and Ebbsfleet Garden City that have been particularly pro-active in marketing themselves as ideally located for both the UK and Europe and have attracted businesses and investment because of that.
Eurostar’s by-passing these destinations, albeit temporarily, may make them less attractive for inward investors.
Both areas, trail blazers in Kent, are served by Eurostar and HS1 and have, when compared to other regions in the country, enjoyed relatively sustained and buoyant commercial and residential property markets - even
The recently launched Ashford Property Market Report (APMR) highlights that prior to the pandemic, Ashford had seen a positive retail environment with rental growth of 5% despite significant structural change in the sector.
The town’s office market was also benefiting from the fast access to London and the continent. Recent years has seen the arrival of a number of tech and professional services companies specifically noting transport connectivity as a factor in their decision-making. This has driven rental growth. Prime office rents have grown 25% during the past five years. The loss of this connectivity is
Neil Chatterton (r)
Ashford has also seen robust growth in industrial rents, rising 38% over the last five years.
Reflecting the growing appeal of the location as a business centre, residential values in the town have risen ahead of the Kent average over the last 12 months, up 1.8% compared with 1.5% for Kent as a whole. Prices stand 21% ahead of where they did five years ago.
Ideally positioned with easy access to major motorways and the rest of the country, Ebbsfleet too has land and incentives to build business premises and attract organisations and enterprises from both the UK and Europe.
With the UK’s post-Brexit transition period ending on 31st December 2020, it is more important than ever to keep established ‘hubs’ across the country open and working, in order for businesses both sides of the channel to continue seamless trading.
Very real fears of job losses as a consequence cannot be overlooked or underestimated.
At Caxtons, we would back efforts, by both local and national government, to lobby and talk, and encourage Eurostar to reconsider its decision.
*For the past 8 years, Caxtons has been engaged in compiling the annual Kent Property Market Report (KPMR) (2013 – 2020), and has also researched data and provided analysis for the Ashford Property Market Reports.