The impending COVID-19 recession will cost UK landlords £5.7bn ($7.4bn) in rental income by 2024, research suggests.
The financial impact of the coronavirus pandemic will see rents in the UK fall by at least 5%, rental service Home Made estimated, based on analysis of rental value trends following the global financial crisis.
This represents £5.7bn of income lost for Britain’s landlords — four times the £1.3bn of rent lost to the 2008 recession.
What’s more, the rental economy is not expected to bounce back until early 2024 at the earliest.
London is set to be hit hardest, with rent declining by at least 9% — a loss of £3.9bn for landlords. The areas of Westminster, Tower Hamlets and Wandsworth could be particularly effected, the study found.
Landlords across the UK should “brace themelves for reduced returns,” as renters on a tight budget will be less willing to risk moving, and increased job market uncertainty will drive down rents, Home Made warned.
To stand out in the slower rental market, landlords should highlight outdoor spaces, allow pets and adjust spaces for home-working, the experts at Home Made added.
“The COVID-19 recession looks likely to hit harder than any in living memory,” said founder and CEO Asaf Navot.
“Landlords can protect themselves by acting fast and securing longer-term tenancies with their current renters, or alternatively, by reacting quickly to the pent-up demand on the new rental market following lockdown.”
To secure long-term income, landlords should consider offering rent reductions for lengthier contracts, Navot advised.
He said: “The good news is rental property is a more robust investment than others in a recession, protected from the extreme peaks and troughs of the sales market as people still need to rent homes, even if they’re cutting on other costs such as travel and leisure.
“Renters are still enquiring, and landlords who are willing to compromise and prioritise longer term income and smart cash flow management over short term profits — at the same time as streamlining their operations to cut costs — are most likely to succeed.”