Can the Housing Market Gain Back Control in the aftermath of Covid-19? 

Amid our new year's resolutions, the January blues and thinking about what we were giving up for Lent, the world heard about a virus travelling far and wide. At first, slowly and then suddenly, very, very quickly, spreading to all four corners of the globe.

The result was an unexpected halt to life. Restaurants, cafes and shops all started closing their doors. Phrases like social distancing, non-essential and self-quarantine innately became part of our everyday reality, and just like that - we were in a lockdown.

Industries worldwide have seen a decline in sales, a reduction in staff and a grounding of production, putting everyone under growing strain.

https://www.unbiased.co.uk/life/homes-property/how-has-covid-19-affected-house-prices-predictions-for-2022

The property market was one of the many sectors that this virus has bulldozed. A sector before March was growing strong and steady and while the global message has remained the same - Stay At Home, the housing sector has seen a noticeable impact. The irony is that the longer families spend time together at home, the more they dream about moving to a bigger and better place.

Right now, there is a great deal of uncertainty surrounding the property market; 2020 has seen a 70% fall in buyer demand compared to 2019. This is not the first time this industry has been hit hard by a global disaster, and sadly it won't be the last, but with each instance that goes by, we learn something new.

At present, there is little we can do about the virus other than take heed of the restrictions instilled by the Government. Although understanding the potential impact this virus could have on us economically will take time, a lot will have to do with the duration of the lockdown. Therefore, the exit strategy and how employment levels can survive are integral.

However, knowledge is power, so grasping the process of buying and selling a property may make all the difference during this unsettling and unpredictable time. Who knows, you might find a silver lining in the dark clouds.

But what about the sales that were going through before the pandemic struck?

Since the lockdown, there has been a striking number of broken buying chains as buyers pull out of purchases or at least look to renegotiate as their circumstances change in line with the economic consequences of the virus.

In fact, with the insistence of social distancing, staying at home, and the uneasiness of job positions, it has become near impossible for people to bother with physical viewings or valuations and with over £82 billion worth of sales on pause since the end of March, the impact is real.

What exactly is a Property Chain?

Fundamentally, a property chain is when the buyers and sellers of a property are dependent on one another. The successful purchase of their new property depends on the other completed transaction. Essentially, you could find yourself in a chain of 5, 10, or 20 people waiting on the sale of a house that is five people down the chain from you.

A chain-less sale, on the other hand, is a lot simpler with fewer external factors holding up the exchange. About 10% of the properties sold in the UK market are chain-less, making them an attractive way to purchase a property but not always a possible one.

So, what does this mean for homeowners?

This chain could well leave some sellers in a precarious situation. Everyone's circumstances are different; for many, a sale may not have been just a desired outcome but a necessary one. Financially and emotionally, this can be a heavy burden to bear, particularly if the risk of repossession mounts. In addition, the job sector is under immense pressure, and people could suffer directly from the virus or perhaps through one of their loved ones.

This is just the tip of the iceberg as there will be a huge pressure mounting on landlords who, in turn, feel the pinch as their tenants struggle to pay rent. As a result, rental and hence mortgage arrears will rise, and many investors will look to exit the market and sell whole portfolios.

Other problematic factors affecting this unique situation could be a rise in divorces or pregnancies, seeing a number of properties go on the market where the vendors will be looking for a swift solution.

The dreaded 'R-word

All of these factors lead us to hypothesise that there will be a slowdown in the property market, led by the dramatic and sudden economic disruption. Many people believe that even with all the government intervention, a deep and prolonged recession may be on its way, with a long road to recovery ahead.

Is There Any Good News?  Yes!

"In every adversity lies the seed of an equal or greater opportunity" - Napoleon Hill

There will be a great deal of anguish in the market, but from the point of view of a would-be investor looking to enter or re-enter the market, now might be the wisest decision you'll make. The good news is that extraordinary times create extraordinary opportunities.

The key to succeeding in business is to adapt, as the market changes, you can allow yourself to either be blown off course or adjust your sails and stay on track. If you position yourself well and look in the right places with the right strategies, abundant opportunities will be on the horizon.

You can view the impending recession as a threat or an opportunity. Although, struggling homeowners and landlords will need rescuing more than ever, with the right tools in your toolbox, you can be there to help them and create WIN: WIN outcomes for all parties.

There will be a great deal of anguish in the market but from the point of view of a would-be investor looking to enter or re-enter the market, now might be the smartest decision you’ll make. The good news is that extraordinary times create extraordinary opportunities.

The key to succeeding in business is to adapt, as the market changes you can allow yourself to either be blown off course or adjust your sails and stay on track. If you position yourself well and look in the right places with the right strategies, there will be an abundance of opportunities on the horizon.

You can choose to view the impending recession as a threat or as an opportunity. Struggling homeowners and landlords will need rescuing more than ever, with the right tools in your toolbox, you can be there to help them and create WIN: WIN outcomes for all parties.

There will be people on the market who will be highly motivated to sell for many reasons but unable to find a suitable buyer in the post-corona. This is where creative property solutions really come into their own; having been firmly established in the last recession, they will be here again to offer a lifeline.

How might this work?

A property strategy called Lease Options is easily the front-runner. Where sellers are struggling to sell, a lease option can offer them a way out without suffering the consequences of being forced to accept a massively reduced sale price or, worse, handing the keys back to the bank through repossession.

What is a Lease Option Agreement?

A two-part agreement between an investor and a seller. The investor leases the property over a certain period with an option to buy at a later date.

Within the time the property is being leased, the solicitor draws up paperwork to allow the investor to take control and responsibility of the property, freeing the seller of the emotional and financial burden.

Thus creating a WIN: WIN outcome! In addition, lease Options can be used to control properties in order to live in them, rent them out or renovate and sell at a later date.

 https://www.ukfinance.org.uk/news-and-insight/blogs/how-covid-19-has-shifted-housing-market-dynamics

At this point in the economy, property investment competition will be low as the market is driven by emotion and the dominating feeling now will be… FEAR.

But it's precisely that, an emotion. With the proper due diligence, you can enter the market when most people exit and grow your portfolio.

It becomes a buyer's market again, primarily through creative property strategies, as they allow you to mitigate your risk by shielding you from a stuttering economy and falling house prices.

This is not the first time the housing market will have to dust itself off and try again. To name but a few, the 1930s Great Depression, the 1990s oil price shock, the end of the Cold War and then again a huge blow in 2008 when the financial crisis hit, sparked by subprime lending in the property market.

We got through these troughs, and we built back up; at least this time, the crash isn't related to the property market. We know the economic recovery period for Covid-19 could be a great and lengthy challenge with the likelihood of a deep recession hitting and hitting hard, but finding opportunity, tapping into our inner resilience and continuing to adapt will become the difference between surviving and thriving.

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