Cashflow is the lifeblood of any business. Without it, salaries, loans and on-going costs cannot be met resulting in banks calling in loans or repossessing property as well as staff being made redundant.
In this blog, we’ll identify the impact of Coronavirus on the lettings market and cashflow. We’ll be offering tips on how to manage this critical situation and proactively respond to any changes.
Why is Cashflow so Important for Property Owners and Landlords during this Unprecedented time?
During times of recession or shock, impacts to the economy and people’s lives can be significant such as with the Coronavirus. This changes people’s behaviours in particular if people are unable to work this could impact their ability to earn in certain industries resulting in a downstream impact on financial responsibilities such as mortgage payments, rent payments, loans and utility bills.
As we have seen recently businesses such as the leisure sector and airlines have been impacted due to a lack of demand resulting in employees being asked to take time off at possibly reduced salaries or unpaid if they are on day to day or zero-hours contracts. Individuals or tenants in this situation are the most vulnerable as their ability to meet their commitments such as rents, mortgage payments and utility bills. This means they are potentially likely to be given notice for breaking the terms of their tenancy. Ultimately Landlords may not want to evict but they may not be able to afford to maintain a property with a tenant not paying rent yet still have the responsibility to meet the cost of mortgages and property maintenance.
For estate agents managing property, it is essential they understand the make-up of the tenants in their portfolio to prepare themselves for when the situation changes. Agents will have a responsibility to respond to tenants’ fears if they cannot pay rent as well as Landlord concerns if they do not receive rent.
Ultimately in the current environment, there is a window of 3 months where Tenants/Landlords/Agents have been given help with, mortgage repayments, rent ‘holidays’ and Furloughing. But after these 3 months, it is likely the prevailing rules will still apply so it is better to be prepared and have a vision of what this will look like and what to expect. Below are some current links to relevant information for Landlords, agents and tenants.
1. Govt Furlough – Job Retention Scheme
2. Govt – Financial Support for Business
3. Govt – Guidance for Landlords and Tenants
4. RLA – Advice for Landlords
Estate Agents have an on-going responsibility to prepare for
any downstream impact this is having.
2. Assess the tenants in your portfolio base. What is their employment situation?
Doing these tasks will help protect your tenants/landlords and on-going revenue stream. Ultimately a good agent will do this to enhance their reputation and earn loyalty points from their Landlords and Tenants.
- As an agent check what help there is from the government to help with your cash flow and on-going costs, is Furloughing an option, should you consider grants or loans?
- As an agent have you contacted your landlords to better understand their current situation? By nurturing them you will gain their respect and loyalty for future business.
- As a Landlord have you contacted your tenants to check they are ok? Some communication to better understand circumstances will better prepare and lay the groundwork for any future action to be taken for the benefit of all.
- If tenants have issues with paying rent, detail a plan to proactively respond. In the current environment the first port of call should be health and welfare then assessment of future financial commitments.
- As a Landlord, consider that it may actually be preferable to have a tenant in residence looking after the property that could apply for benefits that will likely help then alleviate the rent void. You help the tenant keep their property until they get back on their feet and you help yourself by pushing to get some rent paid.
- Whether you are an agent or landlord have you planned what the environment will look like after 3 months to prepare your portfolio and business? How does this align with your current business strategy, what adjustment should you make?
Doing the above as a landlord or agent will demonstrate a proactive rather than reactive approach which will benefit all parties.
During tough times such as this, it is easy to bury your head in your hands and try to ignore the issue, this will only prolong the agony and pain for yourself and ultimately those around you. Go back and read the best practice tips and take this time as an opportunity to re-energise your business as an agent or landlord looking for ways to enhance and improve.
Call us if we can help you during this time with any advice and guidance on the inventory and check-in process. We are always happy to discuss your experiences and provide assistance and insight.
Contact us today to discuss your lettings service with our specialist inventory process.
Tel + 44 7932 760 563