State of the Lettings IndustryVol II, 2020

Welcome to our latest State of the Lettings Industry report.

Goodlord’s third State of the Industry Report is our biggest yet - more than 350 property professionals operating in the lettings sector participated in our summer survey, and more than 2,750 tenants took part in our concurrent tenant survey.

Covid-19 has - unsurprisingly - become the biggest concern for property professionals in the time since our survey at the beginning of the year. However, optimism about the future of the industry is better than ever, reflecting the remarkable resilience of the lettings segment of the property sector. Covid-19 has brought with it many challenges, including an embrace of technology for many businesses, and the lettings industry has met these challenges head on.

Although it’s almost impossible to predict what the future holds in these uncertain times, we think the lettings industry’s future is looking brighter than ever - so keep calm and carry on letting.

William Reeve
CEO, Goodlord

Breakdown of respondents by region and portfolio

Up to 199 properties
200 - 499 properties
500 - 999 properties
1000+ properties
North West
4%
5%
1%
1%
North East
3%
3%
1%
0%
West Midlands
3%
5%
1%
0%
East Midlands
3%
3%
0%
2%
South West
6%
4%
1%
2%
South East
8%
9%
3%
1%
Wales
2%
1%
0%
0%
London
12%
5%
3%
8%
respondents-map

A cross section of property professionals

A range of property professionals from across England, Wales, and Northern Ireland responded to our survey, including private landlords and build-to-rent operators, with lettings-focused agents making up the majority of respondents.

Breakdown of tenant responses by age and region

18-24
25-34
35-44
45-54
55-64
65 and over
North West
4%
5%
1%
1%
1%
1%
North East
3%
3%
1%
0%
1%
0%
West Midlands
3%
5%
1%
0%
1%
0%
East Midlands
3%
3%
0%
2%
0%
2%
South West
6%
4%
1%
2%
1%
2%
South East
8%
9%
3%
1%
3%
1%
Wales
2%
1%
0%
0%
0%
0%
London
12%
5%
3%
8%
3%
8%
01
Brexit fades into oblivion as COVID-19 dominates concerns

Covid-19 is now the biggest concern among property professionals throughout the UK, with 47% of respondents citing the ongoing impact of the pandemic as their biggest worry for the rest of the year.

Brexit, which 20% of property professionals said was a concern in our survey at the outset of 2020, has faded almost into oblivion, with only 2% citing it as their main concern, despite the fast-approaching deadline. But legislation and compliance is still a significant concern for property professionals, with a third of respondents putting it ahead of Covid-19.

Meanwhile, 43% of respondents said that their main priority in 2020 was winning new landlords. Finding new ways to generate revenue, reducing administration time and improving the customer experience also emerged as key priorities for property professionals in the second half of 2020.

Biggest concerns

Unsurprisingly, Covid-19 is far and away the biggest concern for property professionals for the year ahead, but legislation and compliance also remains a significant worry, cited by more than a quarter of respondents.

Which of the following things are you most concerned about, in terms of their effect on the lettings industry?

Priorities

While almost half of survey respondents said winning new landlords was their main priority, only 6% said that they wanted to achieve higher management fees.

What is your agency’s main priority?

02
THE IMPACT OF COVID-19 ON THE LETTINGS INDUSTRY

Two-thirds of property professionals say arrears increased as a direct result of the Covid-19 pandemic

Half of those who said that arrears had increased said that they had seen an increase of up to 10%; a further 15% said they had increased by between 11% - 20%; and 11% said that they had increased by between 21-30%. Six percent of respondents said that arrears had increased by over 30%.

Up to 199
properties

200 - 499
properties

500 - 999
properties

1000+ properties

Arrears have increased

Arrears have stayed the same

Arrears have decreased

I don't know how arrears have been affected

There are also indications that arrears could increase further over the coming months. A quarter of tenants said that they had either missed rental payments due to Covid-19, had to make alternative arrangements in order to pay their rent, or were concerned that Covid-19 could have an impact on their ability to pay rent in the future (see next page). Those aged between 18-34 were showing the most financial strain. This is reflected in tenants’ perceptions of their income security, with over a quarter of tenants saying their current income either wasn’t secure or unsure about its security.

Impact of Covid-19 pandemic on tenants' ability to pay rent by age

Has Covid-19 had any impact on your ability to pay rent?

18-24
25-34
35-44
45-54
55-64
65 and over

No, but I am concerned it could affect my ability to pay rent in the future

4%
5%
1%
1%
1%
1%

No, I have not missed any payments or organised a payment plan

3%
3%
1%
0%
1%
0%

Yes, and I have missed some payments or organised a payment plan

3%
5%
1%
0%
1%
0%

Yes, but I have made other arrangements so I have not missed any payments or organised a payment plan

3%
3%
0%
2%
0%
2%

Do you agree or disagree that your current income is secure?

Definitely agree

Tend to agree

Neither optimistic or pessimistic

Tend to disagree

Definitely disagree

Section 21 and Section 8 notice usage slightly up despite eviction ban

Property professionals said that they were serving Section 21 and Section 8 notices slightly more frequently on average over the past 12 months than reported in our winter survey at the beginning of the year.

This increase is despite the government suspending all ongoing housing possession action for five months of this year, from 26 March to 20 September, which meant that no cases could progress to the stage where someone could be evicted during the five-month period, and is likely a result of the increasing arrears.

More than a quarter of tenants consider moving as a result of Covid-19

Twenty-seven percent of tenants said they had considered moving home as a direct result of Covid-19 and 24% of those who had considered moving said that they would move to a different part of the country.

A quarter of those (24%) who had considered moving because of Covid-19 lived in London. Almost a third of tenants said that they would prioritise different features when looking for their next property as a result of the pandemic.

03
TECHNOLOGY SENTIMENT INCREASES SINCE THE LOCKDOWN

Almost 90% of property professionals now believe that technology is a force for good in the lettings industry.

Positive sentiment towards technology has increased significantly since lockdown, with 87% saying technology was a force for good, up from 71% at the beginning of the year. Just over half of respondents (51%) who said that technology was a force for good also said that automation in their businesses would increase as a result of Covid-19.

Automation would be accelerated in over half of businesses as a direct result of Covid-19 and a fifth of businesses would look to reduce the size of their workforce in line with this. Almost a third of respondents said that, although automation would remain similar to the pre-Covid-19 environment, they would prioritise technology that enabled either workforce reductions or remote working.

Do you consider technology to be a force for good?

Impact of Covid-19 on automation by portfolio size

Up to 199 properties

200 - 499 properties

500 - 999 properties

1000+ properties

Automation will be accelerated and reduce the workforce size

Automation will be accelerated but workforce reduction will be limited

Automation will remain similar to pre-Covid-19 environment but we will prioritise technology that enables remote working

Automation will remain similar to pre-Covid-19 environment but we will prioritise technology that enables workforce reductions

Covid-19 will not have a specific impact to our automation

None of the above

Proportion of tenants who would make an offer on property viewed virtually only

Covid-19 might have also had an impact on the way tenants look for a new home to rent: 32% of renters said they would make an offer on a property that they had only viewed virtually, a further 19% said they weren’t sure.

In their own lives, 51% of tenants said they expected to be working remotely, either full time or part time, within the next five years.

04
PROPERTY PROFESSIONALS OPTIMISTIC ABOUT THE FUTURE OF THE INDUSTRY

Property professionals remain positive about the future of the lettings industry.

Property professionals are feeling more optimistic about the lettings sector than they were at the outset of 2020, despite the challenges of Covid-19. An overwhelming majority - 80% - said that they felt “positive” about the future of the lettings industry, an increase of almost 50% since the beginning of the year. Over half of respondents (53%) also said they felt “very positive” about the future of their own agency.

How optimistic do you feel about the future of the lettings industry?

Very optimistic

Somewhat optimistic

Neither optimistic or pessimistic

Pessimistic

Very pessimistic

How optimistic do you feel about the future of your agency?

Very optimistic

Somewhat optimistic

Neither optimistic or pessimistic

Pessimistic

Very pessimistic

Professional impact of technological and social changes

Sixty-nine percent of respondents who said that they felt positive about the future of the lettings industry also expected that the impact on them professionally caused by technological and social changes over the next five years would be positive.

However, property professionals are still finding it difficult to keep up with the pace of change in the lettings industry, with 32% of respondents disagreeing with the statement “I find it impossible to keep up with the pace of change in the lettings industry”.

Up to 199 properties

200 - 499 properties

500 - 999 properties

1000+ properties

Major and positive

Minor and positive

Fairly ineffective either way

Minor and negative

Major and negative

Property professionals’ confidence in financial resources by portfolio size

Up to 199 properties

200 - 499 properties

500 - 999 properties

1000+ properties

Very confident

Somewhat confident

Neither confident or unconfident

Somewhat unconfident

Very unconfident

Don't know yet

Despite the concerning picture for arrears as a result of Covid-19, 84% of respondents said that they were confident their own businesses had the financial resources to continue operating for the foreseeable future, with only 3% of respondents saying they were either unconfident or didn’t know.

More than half of tenants think that they will still be renting in five years' time

The lettings sector won’t be short on renters for the foreseeable future.

More than half of current renters expect to still be renting in five years time, with only 45% of renters saying that they expected to buy a property within this period. Those in the 25-34 age group were most likely to say that they expected to be able to buy a property.

Do you expect to purchase a property in the next five years?

05
The lettings process

Property professionals find compliance the most challenging part of the lettings process.

Almost half of survey respondents described it as “difficult”, slightly ahead of property management, which 43% of respondents considered difficult.

Although only 22% of property professionals described pre-tenancy administration as being “difficult”, half said that they were spending more than three hours on administration for the average let.

Fifteen percent of respondents said it was taking them over five hours. A quarter of respondents who described pre-tenancy administration as “difficult” said that reducing administration time was a key priority for them for the remainder of 2020.

How many hours do you estimate it takes you to complete all of the administration for an average let?

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