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Owning local property has long been a key part of the finances of many local families.
It is a sector of the economy which is sometimes overlooked, but not by covid-19.
The way we have responded to the virus has affected local property owners too, and that also extends to the many thousands of people who depend on them for somewhere to live.
In the next of our series, which first featured in Connect Magazine, on how the different economic sectors might recover in 2020 from the effect of covid-19, today we look at the private rental sector...
"The rental accommodation sector started the year in pretty good shape. There were clouds on the horizon in the shape of a possible landlord licensing scheme (more costly and overbearing regulation) and the possibility of rent controls (which would crush investment in the sector), but generally landlords didn’t have too much to complain about. And then along came the virus.
The government decreed that we must all stay at home for the foreseeable future. With workers losing their jobs as the economy came to an abrupt halt, landlords were soon receiving calls from tenants in financial difficulty. Our Association urged landlords to be sympathetic and to do their bit to help the community through this difficult patch, to communicate pro-actively with tenants and to defer rent and evictions if tenants could demonstrate that they had been disadvantaged by covid-19. All the signs are that landlords have acted accordingly. The States Assembly saw fit to legislate anyway, and all evictions and rent increases were banned until September 2020.
The government is starting to ease the lockdown, but much uncertainty remains. Will there be a second (or third) wave of infections and more lockdowns? Will consumers be confident enough to go back to bars, restaurants, and shops? And how much permanent damage has been done to the economy? Only time will tell. What we do know is that this exercise has put a big dent in government finances, which will have to be filled at some stage, at great cost to the island’s economy.
Pictured: "Landlords are required to jump through more and more hoops."
At this early stage it is hard to say how this will all balance out for the rental sector. The shortage of rental accommodation presumably remains, but incomes have taken a hit and we may see some softness in rents in the near term.
In the long run, the biggest threat to the sector arguably comes from the States. Landlords are required to jump through more and more hoops. If the regulatory burden continues to increase, there may come a point that many will simply throw in the towel, at which point the supply problem will become chronic. We totally support the idea of good standards and behaviour, but not at any cost.
During the recent crisis landlords were asked to do their bit to help the island get through this sticky patch. There may have been exceptions, but in our experience, landlords have generally stepped up to the plate. Indeed, we have heard of some extreme circumstances where rent has been written off completely. We hope that the States Assembly remembers that, when they come to debate issues pertaining to our sector."
Tomorrow, we'll be focusing on the tech sector.
