As the furlough scheme is scheduled to end on the 30th of September 2021, property managers are anticipating a potentially difficult period for the letting industry. Many changes are set to occur as furlough comes to an end – but these changes are not all expected to be in the best interest of property managers as well as the lettings market.
By introducing the furlough scheme in April last year, the government aimed to minimise the number of jobs lost as a result of the pandemic. Furlough was an attempt to retain staff and allow businesses to continue to trade in times where finances were difficult to manage.
Between April and June of 2020 alone, the amount of people in work fell by 220,000 which has been recorded as the largest quarterly decrease since the financial crisis in 2009.
By August 2020, over 9.6 million employees had been furloughed, with this number rising to 11.5 million by May of 2021.
As such, there has also been an increase in voids in the lettings market as many people have moved in with their family members during the pandemic to either save money on rent payments or to simply quarantine with loved ones.
When combined with the ending of the eviction ban in May, there has been further uncertainty in the lettings market that has required a new plan of action for both property managers and their tenants.
What this means for property managers and their tenants
With the end of the furlough scheme approaching as well as the recently ended eviction ban, tenants face new uncertainty and difficulty paying their rent.
Because of the large reliance on the government to pay furloughed wages, the end of the furlough scheme will have detrimental effects on businesses that cannot afford to support their staff financially.
The potential rise in unemployment and decrease in job security will affect the lettings market as rental payments may be delayed or not able to be met without a regular income from tenants.
This means that property managers will also feel the effects of missed rent payments and may even have to evict their tenants as a last resort.
Although the effects of furlough ending are predicted to have a negative impact on employment, many forecasters actually anticipate only a small rise in unemployment.
There is hope that government restrictions lifting on the 19th of July will mean that businesses have some time to recover before furlough ends, reducing possible unemployment.
What property managers can do to prepare for the end of the furlough scheme
It is in the best interest of property managers to establish clear communication with their tenants as they were encouraged to do at the beginning of the pandemic. Consistent communication will help to maintain relationships with tenants, which is especially important during turbulent times.
Repayment plans could be considered with tenants before the furlough scheme comes to an end if keeping up with rent payments will be difficult for them and you are in a position to offer this.
Property managers can prepare for the end of the furlough scheme by also making the most of the technology that is available to them. Tech solutions, such as property management software, make it easier for property managers to keep track of the rent that is owed to them and keep track of certain agreements that are made with specific tenants.
Property management software can aid in the efficiency and accuracy of tenant information as well as helping property managers to save time and money. Streamlined systems allow property managers to adapt to change.
Solving problems before they occur and planning for them is key so that focus can be placed on navigating through the lettings market during these changing times.