We all saw Boris Johnson’s speech laying out the roadmap to get out of lockdown. The dates are set, as we transition to rely on the vaccines to take over to protect the population. The current lockdown and restrictions have taken a big toll on the rental market in Reading and the surrounding towns. We are glad the lockdown is being lifted slowly but surely. We would like to share 8 reasons why we believe; the rental market is currently undergoing a correction in pricing.
#1. Quarantine rules for new arrivals
The quarantine rules whether from a red list or non-red list country makes it overly complicated to Travel right now. Many employers are likely to be holding off movement of staff until the travel Complications ease. Nobody wants to pay £1,750 to stay holed up in a hotel for 10 days. So, unless it Is vital to travel, most people – whether travelling for business, relocation, or leisure, have ultimately Decided not to come to the uk recently.
#2. Readings central business district is closed currently
Over the last decade at least, the largest housebuilders in the uk have mostly been building Apartments rather than houses in often congested city centres. This was because of a shortage of Land in densely populated areas and because there was always an end user – be it a buyer or a Tenant renting. People chose to live near their place of work to avoid long commutes and they Wanted to live amongst the hustle and bustle of everything a city offers – meeting new people, Networking, pubs, bars, restaurants, and leisure activities.
Fast forward to 2021 and most people do not need to commute into an office and all restaurants, Pubs, bars are closed so people cannot network or meet others. As a result of this many people have Left living in the town centre and have instead opted to move to more rural areas where they can Have access to gardens, be socially distanced, enjoy scenic jogging routes, parks, and open green Spaces. Town centre apartments have suffered the most because of this and until business travel Returns; companies start to hire and move people around again, apartments, especially central ones Could stay in the doldrums for some time to come.
#3. Trends of working from home to continue beyond the pandemic
Employers have had their staff working fully remotely for almost one year now. There are many Companies who will not see the need to have a large costly office in central locations anymore. Whilst we can see that many companies continue to have a presence in the town it is likely that These offices will be used as hubs for staff to work from for 50% of the time for the foreseeable Future.
This would mean that it is fully possible to live in birmingham and commute to reading by train once A week for work purposes and then spend the rest of the time working from home. Working from an Office environment seems old fashioned now and so many employers may not revert to the way Things were before the pandemic began.
#4. Reluctance of people wanting to move whilst heavy restrictions are in place
Even though the Government gave the green light for people to be able to view properties and move; the fact is that many people do not want to move during the pandemic and instead have opted to sit tight until restrictions are lifted and wait things blow over. Even though most estateagents are well-versed with covid-19 protocols and can safely conduct a viewing – many tenants do not want to take any risk of catching the virus or spreading it during this stressful time.
#5. More jobs being lost than created
Companies such as Amazon, Deliveroo, and other firms which specialise in home delivery services have had their profits grow and popularity explode. With the exception of these types of companies, most other companies across all sectors of employment seem to be very carefully calculating their head count and most importantly, planning what actions to take when the furlough scheme ends on the 30th April 2021.
The Office for National Statistics (ONS) reported that in January 2021 there are 726,000 fewer people in pay rolled unemployment compared with February 2020. From those unemployed, 425,000 (58.5%) were under the age of 25. Given that town centres and cities tend to be loved most and lived in by younger professionals this could be one of the largest negative impacts on the rental market, especially in central locations. Unemployment is at a 5-year high and the reality is that prosperity and wealth will only return, when jobs return.
#6. Reluctance for tenants to sign new leases because the end of furlough is a scary reality
We have seen reluctance from many people to take on a new tenancy for six months. Many tenants are fearful that they may soon lose their jobs, or that when furlough finally ends that the writing will be on the wall. 7% of renters have currently lost their jobs vs 3% of those who have a mortgage and own their property according to Resolution foundation. There was a trend last year where many single people left their rental properties and moved back in with family where possible, to save money, and form bubbles to avoid living alone.
#7. International students with scholarships are not in town
There is a premier type of student who often arrives to study at Reading University for a master’s degree or for their PHD. These students mostly come from overseas and often go for apartments in the private rental sector. They shun shared properties and even university accommodation. They are very often given grants or paid scholarship’s with excellent earnings to support themselves. During the last year, many students may have decided to take a gap year, with the idea of returning to finish their degrees the following year. Reading’s private rental sector has really missed these international students in the last year.
With Brexit now finished and new rules in place with the points-based system for entry to gain a visa for work, there have been hardly any fresh arrivals from mainland Europe. Reading used to see a steady stream of Europeans arriving first and finding a job later, however with the points-based system now in place they must instead, find a job first and then be allowed to work legally in the UK. With the current pandemic, this has not been easy. We hope to see the return of many jobs after restrictions are lifted and would like to see mainland Europeans come back to help rebuild the UK economy back better than ever.