Your Monday property news update
Post-pandemic renting, three-tier lockdowns and the big office rethink
3 minutes to read
Post-pandemic renting
While the pandemic has injected uncertainty into some real estate sectors, those underpinned by long-term demographic trends stand to gain from growing demand from investors for secure, income producing assets.
This helps explain why the Build to Rent sector in particular is having a moment, new Knight Frank research reveals investment in the sector will hit a new record in 2020. One in five households now rent privately, up from one in ten in 2001, with rent collections remaining resilient throughout the crisis, averaging 95.2% between March and August.
So that's why investors like it, but we've also checked in with tenants via a collaboration with HomeViews. CEO and co-founder of HomeViews Rory Cramer joins Anna Ward and Oliver Knight on the Intelligence Talks podcast for a deep dive into the research, and dissects what the post-pandemic rental home will look like. Listen on Apple, Spotify, or Acast.
Generation Buy
The Sunday Times yesterday reported Boris Johnson has asked colleagues to devise plans for long-term fixed-rate mortgages with a 5% deposit. That follows several weeks of rising mortgage costs for anybody looking to borrow above 85% loan-to-value.
The surge in activity has been one part of the problem: Lenders are now grappling with such a large volume of transactions that raising the cost of these mortgages, which are generally used by first time buyers and the self-employed, is the most efficient way of controlling the flow of new applications, something Knight Frank Finance has been monitoring.
Under the proposed scheme the government may take on some of the risk from lenders via a state guarantee.
A three tier-lockdown system
The Guardian this morning reports a new three-tier lockdown system is being planned for England designed to simplify the current patchwork of localised restrictions. The report states the document is in draft form and is yet to be signed off by ministers.
Under alert level 2, people must not meet others outside of their household in private dwellings or gardens, apart from their support bubble, or in pubs, restaurants or other settings. Alert level 3 would include the closure of hospitality and leisure businesses with a ban on social contact outside your household in any setting. Schools are not mentioned.
Meanwhile the PM yesterday said he is expecting the scientific equation to change over the coming months with progress on testing and on vaccines.
The big office rethink
The FT this morning reports on research by the Institute of Directors that indicates more than half of UK directors plan to cut back on office space as a result of the pandemic.
Nearly three-quarters said they would encourage more staff to home work after the crisis and the results suggest a blended approach is emerging on a large scale, something that's also being reflected in some of our own online polls.
This is a complex topic that we'll keep returning to. Neil McLocklin, head of EMEA consulting at Knight Frank, says the future is about migrating from a ‘One Size Fits Nobody’ world, where the choice was limited to the office and occasional remote working, to a ‘Workplace as a Service’ offering that provides real choice to staff and results in a more dispersed, localised, accessible and sustainable real estate platform. It's well worth reading our latest thinking on the issue here.
In other news:
Kate Everett-Allen has published a comprehensive update today on global residential markets.
Finally: China rolls out an experimental Covid vaccine as it eyes the global market; lower taxes like it’s 1993, top economists tell Rishi Sunak; Paris bars to close as French capital placed on maximum COVID alert; stocks rise on signs of Trump's improving health; the stage is set for a showdown on Brexit at a European Union summit next week.