Due to the COVID-19 restrictions, this year’s annual Essex property conference took place online. Guy Longhurst, Managing Partner chaired the discussion along with speakers Alan Williams and Lewis Chambers from Fenn Wright, Lee Pearce and Peter Harrup from BDO. The forum served up some positive and reassuring messages, tempered with caution as we navigate through these uncertain times.
The markets are looking fairly positive in sales and lettings.
Alan Williams gave an overview of the residential sales market with the encouraging news that post Covid-19 has seen an amazing bounce back with large volumes of enquiries, a lot of new listing and plenty of sales being agreed. Prices are generally holding up – the average asking price in England is 2.9% up on this time last year.
It’s a slightly different dynamic for lettings. Tenants are currently looking to rent out of need rather than choice. Additionally, referencing is difficult due to the large numbers of applicants still on furlough and the uncertainty around future unemployment.
It is unlikely that there will be concerted downward pressure on price and transactions should stabilise into a more seasonal pattern, unless the recession proves to be deeper and more protracted than current predictions.
Cheap money is driving great deals but in a more restricted market.
Cheap money has driven a massive surge of mortgage enquiries, however only 50% of the pre COVID mortgage products are currently available and there has been a significant retraction in LTV from 90% to 85%.
Some lenders are treating applicants with more caution, especially the self-employed, and there have been changes to the application process.
Customers have also found that where they have taken payment holidays, lenders can be unwilling to assist with further borrowing – something that may not have been made clear to customers at the time of requesting the payment break.
On a more positive note, with rates at record lows, the five-year fixed rate deal is proving very popular.
East Anglia is in the sweet spot for the ‘New Normal’
The good news for the property market in East Anglia is that lockdown has driven a surge in enquiries from people looking to move out of London and the metropolitan areas of Essex, to the countryside. Having experienced enforced working from home, the lifestyle change and promise of larger gardens is proving very attractive.
Lewis Chambers – Commercial, Fenn Wright
A more fluid environment for the commercial market.
Lewis Chambers talked about the commercial market outlook where the industrial sector is proving the most dynamic. There is a lot of demand for B8 as well as B1 and B2 space where supply is limited so values are being maintained.
The retail market is looking more challenging and landlords will have to compete for their occupants. The incentives available will be a prominent feature to encourage new lease holding but when the holiday on business rates comes to an end, many leaseholders will struggle. The future trend will lean towards a re-purposing of retail towards residential.
Touching on offices, Lewis says that most businesses are typically in the process of refining their office environments and that the feeling overall is that they will need less space. Generally business owners are still tied into a lease so it’s too early to take a view on just how much excess office space will be on the market.
Positive outlook for business but planning for change is vital.
Peter Harrup felt that overall the outlook was positive for businesses in the region. Government support has obviously helped with around £30 billion being paid out so far in the job retention scheme. Clients are generally seeking advice about furlough calculations as well as the business interruption loan scheme. Talking about the outlook post pandemic, Peter said that it will be interesting to see what happens with VAT deferrals including the reverse charge that has been delayed until March 2021. Businesses will also be looking to restructure and make redundancies once the furlough scheme comes to an end.
The message to businesses was that now is a particularly important time to be talking to your advisers and to take professional advice with business planning.
Red tape and regulations are causing delays in commercial.
Lee Pearce talked about the government’s forfeiture restrictions that have been imposed on landlords. Currently under the Coronavirus Act, any of a landlord’s options to try and recover unpaid rent will not be accessible until the end of September.
On the plus side, landlords are agreeing concessions by way of additional security guarantees and the removal of break options in leases.
On insolvency, Lee says, “We’re going to have some real difficulties around insolvency. Our team is saying that there is actually a reduced number of liquidations but we are seeing an increase in numbers of administrations and CVAs.”
Construction companies are talking about adjudications and ongoing delay claims and where the liability lies in terms of having to impose social distancing rules on site combined with having to make up for lost time due to shut down. Currently the drive is to get things moving again but longer term this will be an issue.
There are many unanswered questions around business interruption insurance both from a tenants’ and landlords’ point of view. To mitigate your risk, if you think you can make a claim, make sure you do so now to avoid falling foul of late notification provisions.
Guy Longhurst closed the event by saying, “We just have to deal with what’s in front of us. Thank you very much for joining us. We wish you well and fingers crossed in twelve months’ time, we’ll actually have a proper conference.”
You can watch the full virtual property conference here.