While Brits stew in lockdown, they are not moving house. Indeed, the government has now urged people to stay put for the time being to help limit the spread of the coronavirus. Completions have been put on hold and estate agents have shut up shop. The nerves which have started to trickle into the housing market after its post-election bounce are threatening to turn into full-scale panic. Banks are pressing for a full suspension of the market to prevent further pain.
As a nation, we love to invest in property - a home will be many of our first investments. The current turbulence is therefore immensely concerning for many.
We hope to ease those concerns by answering the key questions investors might have about the impact of the coronavirus on various aspects of the property market. In this page you will find links to all our best property content to help you through the challenging times.
With 160 years of history, Investors Chronicle has unrivalled insight into managing your money during good times and bad. To help investors face current challenges with clear heads, and come out of the other side with their wealth intact, we’re going to be making lots of our best content free. We also have a new suite of educational content to guide and reassure those attempting to manage their money in unprecedented times.
- What is happening to house prices?
- Why do house prices rise and fall?
- Can I apply for a mortgage?
- What will happen to loan to values if property prices fall?
- What impact does the falling interest rate have on my mortgage?
Like most aspects of life across the country, the UK housing market has entered a stasis. The UK government has put the entire property market on hold, encouraging buyers and sellers to delay transactions. Emma Powell and Alex Newman run through what this means for prices, mortgages, banks and housebuilders in this thorough run-through.
The government has given the green light for property sales sites and show homes to reopen and viewings to restart, after weeks of being prohibited under social distancing guidance. While this will likely provide a boost to sales for housebuilders, there are some obstacles that remain.
Housebuilders hope that forward sales will help completions bounce back once construction and sales sites are formally reopened. However, not all of the homes included in forward sales figures represent contractual purchasers, but also reservations. A more prolonged economic downturn post-lockdown could mean that fewer of those reservations translate into completions if buyer confidence is weakened or unemployment levels rise, writes Emma Powell.
- Who can apply for a mortgage holiday?
- I’m a buy-to-let landlord, what do I need to know?
- How are commercial landlords holding up?
- What happens if I can't pay my rent?
The government is doing what it can to ease the pressure on tenants who are facing several months without work or pay, while banks are allowing homeowners to defer mortgage payments. Those offers have repercussions further down the chain though.
The Coronavirus Act ban on private tenant evictions for at least the next three months, and the suspension of all eviction proceedings going through the courts for 90 days, has exposed landlords to a new risk of lengthy periods of rental losses.
Falling prices can reduce a property’s loan to value, thus forcing the property owner onto a far less generous mortgage deal than the ones currently being offered. In this article, Rosie Carr explains the best course of action for buy to let landlords.
Stocks, REITS and funds
- Are healthcare REITS and funds a good investment at the moment?
- What will happen to housebuilders if no-one is buying houses?
- Are housebuilder dividends likely to be cut?
- Have estate agents got enough cash to survive the turmoil?
Flexible workspace has soared in popularity with businesses, buoyed by the meteoric rise of providers such as WeWork. London's established office landlords have sought to tap into demand, but have they now exposed themselves to the threat of more tenants handing back the keys?
Will landlords be undone by the WeWork effect? (requires standard subscription)
Medical centre landlord and development groups Primary Health Properties (PHP) and Assura (AGR) both confirmed they would pay their respective interim dividends and revealed that quarterly rent collections were in line with historic norms, bucking the trend set by the wider real estate industry. Emma Powell explains why healthcare REITS may provide investors a port in the storm.
Online estate agency Rightmove has confirmed that there has been a massive drop in house purchasing amid the coronavirus outbreak. To help its estate agent customers, the company has announced a 75 per cent discount to invoices for the next four months.
What if it is longer? Asks Michael Taylor in this week’s Trader column. Michael touches on the potential fallout from the coronavirus on Rightmove and other companies which are racing to the bottom with excessive discounting. (Requires standard subscription).
The challenges certainly aren’t confined to the estate agents, or the domestic property market. The links below should help answer some of your most pressing questions about investing in the property market amid the coronavirus carnage.
Several asset managers have suspended trading in their open-ended property funds, citing “material uncertainty” about asset prices in the midst of the coronavirus lockdown.
"In the wake of widespread closures of non-essential shops, pubs, restaurants and leisure facilities, landlords trying to predict the stability of rental income arguably face a tougher task than ever before," writes Emma Powell in this overview of the challenges facing commercial landlords.
Rental income levels were in decline far before the Covid-19 outbreak, which means the prospects of the generous dividends that were being paid by some retail landlords seem dim even after tenants resume trading, argues Emma Powell.
Alex Newman had initially thought of adding housebuilders to his list of stocks to beat the growing crisis in dividend cuts. But this cashed-up sector is facing an incredibly nervous wait to see what happens to house prices. Several stocks have cut their dividends to preserve cash amid the uncertainty. Still there are ways of protecting your income during the turbulence, which this feature can help you identify.
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