Upsides in the property world in a lockdown? – The Property Chronicle
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Upsides in the property world in a lockdown?

The Analyst

We would be forgiven for thinking that we are all doomed if you read all the press at the moment.  However, hidden amongst the gloom spewed out through the BBC and other blood thirsty press reports, was a chink of some hopeful, if not good, news last week. The Bank of England and the City are already cautiously noting that the first economic upswing, as we start to head out of lockdown, is more pronounced than people had anticipated. Early days of course – there is also a lot of bad news to read as many jobs are sadly lost and businesses fail. Further, we know the Government has had to invest an unprecedented amount of public money into the Treasury to shore up the country that will need to be repaid somehow. However, difficult though it might be to read, some business casualties like Laura Ashley and Debenhams had had their day and Covid-19 did not cause their demise. This vicious and unprecedented pandemic will be the cause of some ailing (and some not so ailing) firms to fail but it will also bring opportunities to other more resilient businesses and investors as, as in nature, it will be survival of the fittest – some may argue that is not an altogether bad thing.

The Cabinet Office Guidance on 7 May encouraging reasonable behaviour in contracting sparked many references to property transactions. The property world has had its fair share of casualties together with many battles to fight with tenant friendly commentaries suggesting all tenants, residential and commercial, should be let off payment obligations whilst they are out of work or not trading.

Not all Landlords are the greedy Rachmans of our day and, if we aren’t careful, this Landlord bashing can appear to be no more than class warfare fanned by the left wing press. Some landlords are bad, some are good. They reflect the rest of the world. If you are a pension fund landlord your collections could be paying a miner in Wales his pension and options to waive rent have serious consequences for others depending on that money.

If you are a charity with property rentals needed to help fund the good works, again your options to release tenants from obligations are limited. When residential tenants are furloughed from work on 80% salaries whilst outgoings are dramatically reduced, this is arguably not such a bad deal as to justify people stopping to pay rent. Certain protections against evictions were necessary short term when we were at the height of  the pandemic to stop the unscrupulous but we have to get everyone back to normal asap and that includes property.

The use of mediation to enable safe conversations early with business partners and property owners/co-investors to reach pragmatic compromises and avoid disputes seems an obvious path to take when Covid issues arise.  The use of a mediator and their dispute resolution techniques, even at a pre-dispute stage, allows commercial factors to feature in solutions –  not just the legal rights and wrongs. Such early, safe, conversations can avoid a dispute altogether, something the courts are keen to promote at the moment. It’s a cheap and quick process and organisations such as IPOS Mediation (formerly In Place of Strife) can set them up within days.  It’s also a product with an 85% rate of success so, on any commercial analysis, it’s worth trying.

“Save the high street” is a common call locally. Ironically, the high streets in many towns have rallied like never before, providing essentials when a queue at the supermarket is either impossible or unwanted, reminding their neighbourhoods why a local butcher, greengrocer, baker or cheesemaker is needed and providing far tastier produce than your average supermarket. Lockdown, for some of these businesses, could be their saviour as people decide not to go back to their old ways. Business rates need to be reviewed for sure, but the local high street is hopefully here to stay and this time of lockdown has been a timely reminder to us all of their benefits.

On property sales, anecdotal evidence read recently from one SW London estate agent, tells us that the first week back to viewings was like the week after Christmas. People have had enough time at home to discuss and decide to upsize, downsize, break up even, or change their location to bring about an upsurge in enquiries and surveys.

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