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The UK housing market and coronavirus: The chances of recovery in 2020

With stock markets crashing all over the world due to the coronavirus pandemic, there are fears that the UK housing market could also be badly hit. To understand the chance of this happening, we need to look at the current situation and what might happen next.

The situation before March

The country’s housing market was motoring along nicely before the coronavirus outbreak caused havoc. Figures from Nationwide Building Society show that British house prices increased by an annual growth rate of 3% in the month before the lockdown was imposed. This was the fastest rate in two years.

This was due to a monthly rise is 0.8%, which followed on from 0.3% in February. The annual growth rate in February was 2.3%. The average house price in the UK rose to £219,583 in March. The surge had been led by booming cities such as Manchester and Liverpool but most areas have seen good growth recently.

The different ways the market has been affected

The impact of the coronavirus can be put into different categories.

  • Lockdown measures mean that potential buyers are unable to view properties that they might be interested in.
  • The huge effect on the economy means that many people are unemployed or facing an uncertain future. Around 950,000 new welfare claimants applied in the second half of March, according to the Department for Work and Pensions.
  • Banks have made it more difficult for people to borrow on new mortgages. Some have withdrawn high loan to value deals and others don’t take overtime or bonuses into account as salary.
  • Official government advice is to avoid property transactions.
  • Many people have decided that buying a new home isn’t a priority.

These factors all add up to give us a UK housing market that is grinding to a standstill. To put it simply, the whole market has stopped and will remain that way until life gets back to normal.

The sort of price falls we can expect are unclear

There is no doubt that house prices will be affected by this period of uncertainty and economic gloom. The main issue is that it is extremely difficult to predict any figures. With virtually no transactions going through just now, there is a lack of data to base future estimates on.

The British economy is set for a deep recession. The last time this happened was in 2008, when housing prices crashed through the floor. In fact, it was so drastic that by 2017 property prices in a quarter of UK towns were still below their 2007 peak.

It is feared that the 2020 slump could be even worse than what happened in 2008.On the other hand, the more optimistic predictions suggest that it may just be a short-term wobble, like the way that Brexit affected property prices. It has also been pointed out that the severe economic damage down by the swine flu in 2009 didn’t stop house prices from soaring in the following year.

The chances of recovery in 2020

Very few analysts want to make predictions in this situation, particularly since we don’t even know how badly UK house prices will be hit.

However, the main hope is that overall economic weakness doesn’t tend to depress the UK housing market for long. It is possible that it bounces straight back as soon as the lockdown ends and people get back to their normal lives again.

The fact that interest rates are so low is sure to be a factor. Anyone who has the cash and the stability to buy a house might see this as being a great time to do so. Therefore, it is unlikely that we see the market standing still for too long.

In the best case scenario, prices will fall in the short term and recover by the end of 2020, but there are still too many unknown factors to bet on this being the case.

By Robert Bell

Source: Invezz

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UK house prices growth ‘grinding to a halt’

UK house prices rose three per cent last month just before the coronavirus outbreak hit, according to Nationwide figures released today.

But the bank warned housing market activity is “grinding to a halt” as the coronavirus lockdown stops buyers and sellers from viewing properties.

Banks have also withdrawn mortgages or made it tougher to secure mortgages, also dampening UK house prices.

Coronavirus means outlook ‘highly uncertain’

“Housing market activity is now grinding to a halt as a result of the measures implemented to control the spread of the virus,” Nationwide’s chief economist Robert Gardner said.

“Indeed, a lack of transactions will make gauging house price trends difficult in the coming months.

“The medium-term outlook for the housing market is also highly uncertain, where much will depend on the performance of the wider economy.”

The UK is facing a severe economic retraction as a result of the coronavirus crisis. The government has closed all shops save supermarkets, pharmacies and banks.

And people are able to leave the house once per day to exercise, while maintaining two metres distant from others.

“Economic activity is set to contract significantly in the near term as a direct result of the necessary measures adopted to suppress the spread of the virus.,” Gardner added.

The value of British homes rose 0.8 per cent on a monthly basis in March, up from February’s 0.3 per cent change. And its three per cent annual growth rate outpaced February’s 2.3 per cent growth.

That left the average UK house price at £219,583 in March.

UK house prices growth ‘meaningless’

Jeremy Leaf, north London estate agent and a former RICS residential chairman, called today’s UK house prices figures “academic” in light of coronavirus.

“However, they do raise expectations that when restrictions begin to ease, hopefully relatively soon and without too much damage to the economy, there is every chance that activity will pick up nearly where it left off,” he added.

“We are finding that only those industries particularly badly affected by coronavirus are having to pull out of transactions, such as those working in the travel, hospitality or entertainment industries.”

But Lucy Pendleton, founder director of independent estate agents James Pendleton, painted a darker picture. She said UK house prices were now “irrelevant” with the coronavirus outbreak. Pendleton has put more than half its estate agents on furlough, and last week house sale numbers slumped 84 per cent.

“It wasn’t so long ago that commentators talked of Brexit uncertainty putting transactions on ice but that feels like ancient history now,” she said. “Covid-19 has brought brutal new meaning to a frozen market.”

Lenders back away from mortgages

Mark Harris, chief executive of mortgage broker SPF Private Clients, added that “lenders remain keen to lend”.

That is despite some having to pull back from high loan-to-value deals. Nationwide yesterday tightened measures on mortgage applications and no longer takes bonuses and overtime pay into account.

Nationwide also pulled its mortgage offering for low-deposit borrowers earlier this week.

Lloyds Banking Group, which owns includes Halifax and Scottish Widows and is the UK’s largest lender — has capped lending at 60 per cent of loan to value.

And Barclays has put a cap on how many mortgage applications it will accept from brokers. It has also limited high loan to value mortgages.

“In most instances this is a temporary move while they get to grips with the inability to carry out valuations, plus redirect their staff to deal with mortgage payment holiday enquiries,” Harris said.

UK house prices ‘will recover quickly’

“The only silver lining to this situation is that political uncertainty and underlying economic weakness play no part in this chaos,” Pendleton added. “The housing market will come roaring back to life as soon as the lockdown ends, aided by interest rates that are significantly lower than when it began.”

However, it is unclear how long the coronavirus lockdown will weigh on UK house prices.

“This crisis has ripped staff and customers from our hands,” Pendleton added. “Coronavirus has broken the spirits of businesses on a scale not seen since the financial crisis. It is an incredibly testing time but we must come out the other side, and come out fighting.”

By Joe Curtis

Source: City AM

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Coronavirus and the London property market

As the coronavirus outbreak and UK lockdown continues, many are left asking what this will mean for the property market. It’s too early to tell exactly how it will fully impact the sector and economy moving forward. However, the UK property market is robust and has shown its resilience during uncertain times in recent years.

Many professionals in the property industry have stated they believe house price growth will slow down as fewer properties will be going on the market and less transactions will likely take place. However, a major crash in prices is not expected as many believe the market will pick up pace after a period of uncertainty, similar to after the Brexit referendum.

Most buyers and sellers are still proceeding with sales that started before the outbreak of coronavirus. The majority of people are investing in property for the long-term, which means buyers, landlords and investors will be less impacted by short-term fluctuation in property prices.

London property still seen as a safe haven

Even though the short-term future of the property market is uncertain, sales are continuing to be agreed. Property, especially in London, is still being viewed as a safe haven as shares and stock investments have taken a massive blow since the coronavirus outbreak and have shown to be extremely volatile investments.

Prior to the government response to coronavirus becoming more drastic, the UK property sector as a whole had the strongest start to the year for four years. The London property market was also the strongest it had been since prior to the vote on Brexit as asking prices reached the largest annual rise since May 2016, according to Homes & Property.

Rightmove’s House Price Index for March revealed the average price of a property in London reached £638,826, which is an impressive 5.1 per cent annual increase. This is likely due to supply still not keeping up with demand. Additionally, the index also revealed the number of sales agreed in the capital grew by 34.4 per cent, and it even took 15 fewer days for properties to sell once they were put up for sale.

The private rental sector is showing growth, too. RICS have predicted rents in the UK to rise by 2% this year – and up to 3% per annum by 2025. Other property experts state that the Coronavirus isn’t negatively affecting rent prices, which are only down 0.2 per cent on the previous month.

Rising demand from prospective tenants is keeping rents high as supply remains relatively low. A large number of private landlords who have empty rental properties are now scrambling to find longer-term tenants, and are still able to advertise on rightmove and zoopla, with online letting agents Portico making this available at an extremely attractive price.

In short, London’s market fundamentals are considered solid. Even though the fast-paced market will likely slow down due to the coronavirus outbreak and lockdown, the sector is expected to bounce back after a period of uncertainty.

Technology is keeping the property market moving

As physical viewings of properties have been banned following Prime Minister Boris Johnson’s lockdown announcement on 23 March, the market is naturally expected to slow down. However, more and more estate agents are adapting to the measures by offering virtual property viewings through “walk through” video tours and Facebook Live events.

With millions of people working from home, there has been a substantial increase in virtual viewings. Property portals, such as Rightmove and Zoopla, are also seeing surges in search numbers on par with the figures for Christmas and Boxing Day.

To keep the sector moving, the market as a whole is adapting quickly as many property professionals are using a range of technology and proptech to be able to continue transacting, despite the coronavirus lockdown. In addition to virtual viewings, appointments are still being done through video conferencing tools, FaceTime and WhatsApp and contracts are able to be signed electronically.

Record low interest and mortgage rates make borrowing more affordable

The Bank of England lowered the base interest rate from 0.75 per cent to 0.25 per cent on 11 March, and then it was further lowered to 0.1 per cent on 19 March. This is lower than it’s ever been before and means it’s a great time to get a mortgage or remortgage your property as borrowing is likely to be more affordable.

Borrowers with tracker mortgages should be seeing their mortgage rates drop. If you’re looking for a mortgage, over a dozen lenders have promised to cut their standard variable rates by 0.5 per cent. More banks and building societies are expected to drop their rates in the coming weeks.

Which? found that the cheapest fixed-rate mortgages haven’t seen significant drops as they are already at historic lows. However, average mortgage rates are continuing to fall, and there are a significant number of products available.

Because of this, it could prove to be a great time to buy a property and lock in these record low rates. This means mortgage repayments will likely be more affordable and could provide you the opportunity to borrow more and get more for your money. Additionally, these low interest rates could also fuel property price growth once the crisis surrounding coronavirus is over.

To cut your interest costs further, it’s also recommended to get an up to date online property valuation on your property. Your lender will then need to recalculate your loan-to value ratio (LTV). A lower LTV usually means you’ll receive a better interest rate and have access to a wider selection of lenders.

Get ahead of the competition

The government has recently urged both buyers and renters to delay moving house if possible as it’s important for people to stay at home and away from others during the coronavirus outbreak. However, this could still be a smart time to get ahead of the competition if you’re interested in buying or investing in property.

The property buying process could take longer than normal, and you might need to delay completion depending on how long the coronavirus lockdown lasts. However, you can still get the ball rolling and invest in property with record low interest and mortgage rates. And as the UK, including London, is in a housing shortage, there is still expected to be strong demand for property and rental properties moving forward.

Source: London Loves Business

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Savills: COVID-19 will affect all aspects of UK housing market

Savills predict the coronavirus pandemic to affect all areas of the UK housing market according to their latest data.

The research by Lawrence Bowles and Lucian Cook at Savills, details that general uncertainty will weigh on consumer sentiment.

They also predict to see restrictions on people’s ability to go about their day-to-day business to impede normal estate agency, mortgage and conveyancing processes.

Looking to the stock market, Savills anticipates stocks to fall and therefore people to feel less secure about their personal financial situation.

In addition, the estate agency believes the coronavirus pandemic will have a negative impact on earnings, employment and wealth of a generation.

The government has provided support for the economy and businesses, including liquidity injections, grants and low-cost loans.

As a result, Savills believes this should help to reduce some of pandemic’s impact, as well as aiding in enabling a swift economic recovery and limit the number of households forced to sell.

By Jake Carter

Source: Mortgage Introducer

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What does the coronavirus crisis mean for UK house prices?

We’ve been in lockdown all week, and I’ve been writing about coronavirus nonstop. (In fact, it’s been such a busy week that I literally just stopped for a minute there to check that we’ve only been in lockdown for one week, and not two). And yet I realised that there’s something missing.

I haven’t said a word about the most important asset class in the UK. It’s time to rectify that oversight. Today we ask: “What does coronavirus mean for house prices?”

The UK housing market is closed for business

Let’s start with the obvious. No one is allowed to leave their houses except for essential purposes. Essential purposes – wild as that may sound to some – do not include house hunting. So that means the residential property market is pretty much closed.

Quick interjection here for those of you who are currently in the midst of moving and wondering what to do now – the government yesterday said that “there is no need to pull out of transactions”. And if you’re moving into a vacant property, you can basically go ahead as before.

But if you’re moving to a currently occupied property, “we encourage all parties to do all they can to amicably agree alternative dates to move, for a time when it is likely that stay-at-home measures against coronavirus… will no longer be in place.” In other words, chains across the country are going to be extended massively and potentially to breaking point. (We’ll have more on the mechanics of all this in next Friday’s issue of MoneyWeek – sign up now and you’ll get your first six issues free).

Property website Zoopla apparently reckons that the number of homes sold in the UK will fall by 60% in the next three months. I hate to say it, but that actually sounds optimistic to me – and buying agent Henry Pryor, no stranger to MoneyWeek readers, agrees.

Deals are also going to fall through left, right and centre. Would you move now, unless you absolutely had to? No chance.

There’s another reason the housing market is closed: banks are rapidly shutting down the range of mortgages they offer for new purchases. In effect, unless you can stump up a 40% deposit, you’re going to find it difficult to get a mortgage to buy a house, even if you really want to go ahead right now.

Why is this happening? Firstly, the banks say they are struggling with staffing, which is fair enough given that call centres the world over are shutting. More pertinent though, are two key factors.

One, you can’t tell what a house is worth right now because liquidity in the housing market (always tricky even at the best of times) is gone. It’s very hard to value a home when there are no comparable sales to gauge it against.

Two, you don’t know how secure your customer’s job is. The government has put in place some very strong temporary measures to protect people – but what happens in a year’s time? What state will the economy be in?

Do you want to be writing loans to individuals whose future income is uncertain, secured against assets of uncertain value? Nope, and banks don’t either.

Of course, in pulling the supply of credit to the housing market, they risk creating the very scenario they fear. But as my former colleague Phil Oakley noted to me the other day, that’s what banks always do in these situations.

What does all of this mean for house prices?

OK, so we have a near-total housing market freeze. What does that mean for prices and other financial side-effects?

From an investment point of view, the market appears to have just woken up today to the fact that none of this is good for housebuilders. Housebuilders make houses. If no one is buying their products, they need to hunker down and conserve cash. Maybe they’ll get a chance to build land banks on the cheap, but maybe not.

So you’d probably want to avoid that sector for now (we’ll see how cheap they get).

As far as the housing market goes: the obvious point is that you won’t be able to trust any price or transaction data for several months. There will be some forced sales (hopefully not too many, given that people should now be able to ask for three-month mortgage holidays where needed), and there will be some cash buyers.

However, for anyone who isn’t a professional property flipper or large-scale landlord, none of that is terribly relevant. In stockmarket terms, this isn’t a crash – it’s more like the market has actually been shut.

So what happens when it re-opens? That’s more important. House prices are pretty much driven by the price and availability of credit. If interest rates are low, and you can also get a mortgage easily, then house prices will be high.

If rates stay low but it’s hard to get a mortgage, then transactions probably dry up, but those that do go through will still be at relatively high levels (in effect, you’re only allowing people with access to credit to move).

If rates go up, that’s when you start to see prices falling. Alternatively (or simultaneously), if lots of people lose their jobs and thus become forced sellers, that’s also when you start to see prices falling.

So what’s likely to happen? I guess it depends. The estate agent optimists argue that there will be pent-up demand, but I don’t think we’ll get a V-shaped recovery. A lot of people who had wanted to move will either find that they can’t be bothered any more, or that they are too worried about job security to do so. So I can see it taking a while for transaction levels to recover.

But what about interest rates? I don’t see them going up. I think interest rates will be capped for quite some time and that inflation will be given as free a rein as possible to take off and start eating away at all the debt we’ll have incurred during this. That in turn could and should lead to higher demand for physical assets such as property.

However, again this depends on the economy bouncing back strongly and there being no lasting rise in unemployment. I think that’s still possible – and obviously in the longer run the economy will recover – but it’s the timescale that I’m not sure about.

Overall though, given the importance of house prices to UK households’ balance sheets, this isn’t good news for consumer confidence. But then, none of us is able to go out and spend widely right now anyway, so maybe that’s not as important as it normally is.

Long story short – you can’t move right now so worrying about house prices is probably a waste of time. In six months’ time, we’ll see where we are. In the longer run, I’d expect a combination of low rates and rising inflation to push prices up. But it might be a wee while before we get there.

By John Stepek

Source: Money Week

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UK coronavirus: Government warns Brits not to move house

The government has told people not to move house amid the UK coronavirus crisis as the housing market enters a standstill.

Last night the government said: “We urge parties involved in home moving to adapt and be flexible to alter their usual processes.

“There is no need to pull out of transactions, but we all need to ensure we are following guidance to stay at home and away from others at all times.”

It came as banks pulled mortgages from the market. Halifax withdrew most of its mortgages, including first-time buyer loans, blaming a lack of “processing resource”.

Halifax is reportedly dealing with a mountain of mortgage holiday requests, where homeowners hit by the UK coronavirus crisis ask for time off paying their mortgages.

“Our priority remains the wellbeing of our colleagues and customers and we’re closely monitoring the developing situation and continue to follow official guidelines,” Halifax said.

“This has had a direct impact on our available processing resource and we have therefore withdrawn new mortgage and remortgage products across our residential range with a loan-to-value ratio of over 60 per cent.”

Banking body UK Finance said banks would extend mortgage offers for buyers who have agreed to purchase a property by three months. That could help them move at a later date.

Chief executive Stephen Jones said: “Lenders recognise that many people looking to move into their new home are facing significant stress and uncertainty due to the impacts of coronavirus. Current social distancing measures mean many house moves will need to be delayed.

Where people have already exchanged contracts for house purchases and set dates for completion … all mortgage lenders are working to find ways to enable customers who have exchanged contracts to extend their mortgage offer for up to three months to enable them to move at a later date.”

He added that lenders will help buyers “manage their finances as a matter of urgency” if their financial circumstances change due to the UK coronavirus fallout within the three-month mortgage offer extension period.

Meanwhile, banks have held discussions with the government over the coronavirus crisis’ impact on the UK housing market. The pandemic has made it impractical for banks to undertake surveys and complete paperwork.

It comes as economists warned the UK housing market will take a big hit from coronavirus.

As house prices recovered from Brexit, experts have predicted a huge blow from the UK coronavirus fallout. Yesterday Zoopla predicted the outbreak could knock transactions 60 per cent lower.

By Joe Curtis

Source: City AM

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Coronavirus to bring UK house prices growth to ‘juddering halt’

The coronavirus outbreak is set to bring UK house prices to a “juddering halt” in the coming months, a top economist warned today.

UK house prices fell 1.1 per cent between December and January. But they were 1.3 per cent up on the previous year, data released today showed.

The Office for National Statistics said UK house prices increased 1.3 per cent over the year to January. That was down from 1.7 per cent growth in December.

Average UK house prices increased 1.1 per cent over the year in England to £247,000. In Wales they rose two per cent to £162,000. And they were 1.6 per cent up in Scotland to £152,000, and 2.5 per cent higher in Northern Ireland to £140,000.

London house prices grew 1.4 per cent over the year.

Howard Archer, chief economic adviser to the EY Item Club, said the data showed the housing market was in a relatively good place following December’s election.

Coronavirus to harm UK house prices’ Brexit recovery

But he warned said coronavirus was likely to stop growth in its tracks.

“The late-2019, early-2020 upturn in the housing market looks certain to be brought to a juddering halt by the impact of coronavirus on the economy,” he said.

Miles Robinson, head of mortgages at online mortgage broker Trussle, added the coronavirus outbreak will deal a blow to UK house prices.

“We can’t ignore the elephant in the room,” he said. “Pressure is mounting on the economy as the coronavirus outbreak escalates. As it stands, we’re yet to see its full impact on the housing market.

“With more stringent government guidelines now in place… sellers may see a drop in property viewings for at least three weeks.

“Many existing homeowners will have been financially affected by the outbreak. The chancellor’s announcement to freeze mortgage repayments will help to reassure those who are worried about their ability to make their monthly payments.”

Archer said data from other sources such as the Bank of England and a survey from Halifax showed the UK housing market was in good shape before the crisis hit.

The Halifax survey showed a 2.9 per cent increase in UK house prices in the three months to February.

However, a recent survey from the Royal Institute of Chartered Surveyors (RICS) showed early evidence of the possible impact of coronavirus.

The RICS survey said: “Although near term sales expectations remain positive, optimism has moderated somewhat, with anecdotal evidence suggesting concerns over the economic impact of the coronavirus are weighing on the outlook to some extent.”

Rightmove has in the last week reported a “significant” slowing in property sales.

By James Booth

Source: City AM

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Estate agents urge government to extend coronavirus support

Estate agents have urged the government to protect the industry as house viewings drop and sales activity slows due to coronavirus.

The sector has called for the government to extend the business rates holiday, which applies to retail and hospitality firms, to estate agent companies.

The UK’s housing market looked set to bounce back this year with increased certainty over Brexit due to the Conservative election victory.

The price of property coming to market in London surged 5.1 per cent year on year last month to an average of £638,826, the highest annual rate of growth since May 2016.

However the coronavirus pandemic has caused viewings to drop, as people follow recommendations to avoid social contact. Knight Frank research found that new buyer volumes were down four per cent last week.

”Typically spring is when we see an influx of properties coming into the market but we are already seeing low stock levels and less demand for viewings,” Mark Hayward, chief executive of the National Association of Estate Agents, said.

Despite challenging circumstances people will still need to buy and sell, so we are advising agents to move to virtual viewings where possible and for buyers and sellers to take a pragmatic approach.”

The government last week said all retail, leisure and hospitality businesses would be given a business rates holiday, regardless of the size of the firm, however the allowance will not extend to estate agents.

“As it currently stands, estate agents are the only businesses on the high street who will continue to have to pay business rates, due to the fact our offices are classed as commercial space and not retail,” Simon Gerrard, managing director at Martyn Gerrard Estate Agents, said.

He added: “Under social isolation measures, no one is able to view homes or properties, and so sales agreements will grind to a halt.

“In addition, we are at the coalface in dealing with both residential and commercial clients unable to pay rent due to loss of earnings and jobs. We have been left out in the cold by the Government, to deal with a crisis that they have failed to sufficiently plan for.”

Liam Bailey, global head of research at Knight Frank, said: “Given the unique nature of real estate, many investors still need to see assets in person before making a decision.

“Their ability to do so is currently curtailed, especially for those without a local market presence. For some this is undoubtedly slowing and even postponing the decision making process.”

By Jessica Clark

Source: City AM

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Calls on govt to support landlords during coronavirus

Two landlord organisations are calling for government and mortgage lenders to introduce a package of measures to support tenants and landlords hit by the coronavirus.

Both the Residential Landlords Association and the National Landlords Association are lobbying for the government and mortgage providers to give landlords a period of grace with certain payments so they can deal with the effects of coronavirus on their finances.

In particular, the groups want a temporary scrap of the five-week wait before universal credit claimants get their first payment and for lenders to “look sympathetically” on requests by landlords for mortgage payment holidays where their income is being affected through reduced or non-payment of rent.

They have also called for the government to pause the final phase of restricting mortgage interest relief to the basic rate of income tax.

Since April 2017 tax relief on mortgage interest has been gradually phased out so that from April 2020, mortgage expenses will not be able to be deducted from rental income to reduce tax bills.

Instead, landlords will receive a tax-credit, based on 20 per cent of their mortgage interest payments.

This is less generous for higher-rate taxpayers, who effectively received 40 per cent tax relief on mortgage payments under the old rules.

In a joint statement, the RLA and the NLA said: “We are encouraging all landlords to work positively with tenants to provide support where needed throughout this difficult period.

“Landlords should be as flexible as they can to help tenants facing payment difficulties resulting from the impact of the coronavirus.”

FTAdviser reported last week (March 10) that a number of high-street lenders are allowing borrowers to defer their mortgage payments if they are affected by coronavirus.

The Royal Bank of Scotland is allowing mortgage and loan repayments to be deferred for up to three months, alongside temporary increased credit and cash withdrawal limits.

But these measures are not a blanket provision and will only apply to customers in financial difficulty.

Santander will also offer support to customers on a case-by-case basis, which includes the option to defer or reduce payments that are due.

The spreading crisis surrounding coronavirus has wiped billions off the stock markets, with the FTSE 100 dropping nearly 11 per cent on Friday (March 13) — the worst daily dip in more than 30 years.

Stock markets have been dropping across the globe since the coronavirus started to become a major issue as countries closed borders and introduced lockdowns to curb the crisis.

Prime minister Boris Johnson has urged everyone to avoid unnecessary social contacts, to work from home where possible, and to stay away from pubs and restaurants.

People in at-risk groups will be asked within days to stay home for 12 weeks.

This afternoon the chancellor is expected to announce new measures to curb the impact of the crisis on businesses.

By Amy Austin

Source: FT Adviser

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Will the coronavirus epidemic harm UK property prices?

With current turbulence in equity markets, some investors who sold out of stocks and currencies last week are looking around for alternatives. UK property, which has been severely depressed due to the uncertainties around Brexit last year, looks like it could be one of them. UK house price growth continued its upward trend in the months immediately succeeding the election – in January UK house prices were up 1.9% year on year.

This was the largest increase in 14 months and beat December’s number of 1.4%.

At London estate agent Benham & Reeves, there is notable new interest in the market. It reports a higher total number of transactions so far in Q1 than in the past 112 months, which represents a dramatic upswing in interest. It is a trend being seen elsewhere in the housing market.

“Investors should be looking at fixed-return and less risky alternative investment options,” says Yann Murciano, CEO at BLEND Network. “We have already seen investors liquidating their equity positions and looking for alternatives that provide steady yield.”

BLEND Network is a peer-to-peer property lending marketplace that connects lenders directly with borrowers and focuses on lending to established property developers. Lenders can lend from GBP 1000 to property-secured loans and earn up to 15% p.a.

Murciano thinks that the coronavirus will undoubtedly affect the London property sector, but says the worst of the impact will be restricted to the international buyer and luxury property market focused on Prime Central London real estate. Outside the capital, property prices are less volatile and he sees a growing pool of local, specialised developers who can deliver projects with strong investment potential.

There is still a shortage of housing supply in the UK

The UK continues to suffer from an under-supply of low cost housing and there are now a number of funds and platforms that are addressing the appetite from investors for strategic allocations into that sector.

But what sort of impact can we expect from coronavirus on the UK property sector?

The Royal Institute of Chartered Surveyors (RICS) has polled surveyors in the UK, asking them about what they expect to see in terms of the effects of the virus. Activity in the housing

market was up in February, but much of the economic effects of the coronavirus have really only been felt since the beginning of March. It may be we see a delay of sellers putting houses onto the market at the same time as buyers and investors are looking for new opportunities.

The recent decision by the Bank of England to cut rates should not be discounted either. This will make mortgages cheaper and with the additional and very dramatic stimulus measures announced, will have a positive effect on the UK economy in the medium term. This could create a situation where we have more buyers than sellers in this market, with knock on consequences for house prices.

Another factor has been the introduction of stamp duty at 2% for overseas buyers of UK property, announced in the UK budget last week, which will apply from April 2021. This will apply in England and Northern Ireland and is intended to take some of heat out of UK property from foreign investment. That said, it means there is now a closing window of opportunity for foreign investors in UK property. This could create demand at a time when the property market would otherwise be running out of steam.

Source: The Armchair Trader