What Does Recession Mean To Property Investors In Q4 2020 And Beyond?

Brett Alegre-Wood
October 1, 2020

recession and its effects to UK Property Investors 

We have been talking about recession for several weeks now. What impact does recession have on UK Property Investors? 

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What does the recession mean for property investors?

You know look it really depends on your individual circumstances. It means potentially there's going to be opportunities. It means potentially interest rates are going to stay low okay so your cash flow should be okay. But it does mean that you know your tenants could lose their job and stop paying the rent. However and this is what I would say is you know when we went into the recession we told people if people weren't going to pay if tenants weren't paying you get that payment holiday underway and i'm still saying it to this day even though a lot of people think the first three months it's ended it actually hasn't ended yet.

You can apply to your fund that and say I you know I want to pay my holiday because my thing and for any of our tenants I'm sorry any of our landlords if you're having difficulty you need a letter to send to your mortgage company we're more than happy to provide a letter that just basically says hey this is where it's at you know and you know please grant the main extension you know and certainly you know we're negotiating and that's actually one of the things we'll talk about a little bit later on is we're doing a lot of work to make sure we work out and understand where the tenant is at and then work out where we can go from there.

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And I think that's one of the keys you know it's being said a lot but look you know in terms of the recession the real risk for property investors is not so much on the cash flow side. I don't think although it could be if things got really really bad but certainly the government seems to be indicating that they'll do whatever it takes to support the housing market and if that means that there's lots and lots of you know tenants not paying all this sort of stuff the potential is that they will come in and support those tenants because they don't want an eviction crisis okay in which case the landlord gets paid so that's good.  So there's a number of things the real I think effect is number one is if you lose your job because of the recession okay but then we have and there's a calculator on the website you know if you go to tools onto our website gladfish.com and go to the menu and go tools and you'll see what happens as a scenario what happens if you lose your job and you can plug in some numbers and see what if you get your job with 30 percent you know drop in pay over three months that sort of thing you can play with those numbers. And I think that's really important the final thing is that capital values drop. 

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Now I'll leave the rest of that for a little while and the reason I'll leave for a little while is because I'm going to deal with this towards the end when I talk about different areas and why I think you should be investing in certain areas and not other areas. The unfortunate news is if you've got stuff outside the major cities the trend is not good long term for those. Even though you know we're talking about working from home even though we're talking about zoom meetings even though we're talking about all these trends we should see people be able to stay out of the cities the reality is people want you know what's going on with the cities and that's and you know they're attracting the talent they're attracting stuff that's going on and that's all the fundamentals that mean house prices grow so but we'll talk more about that particular question most definitely.

Video Transcription

What does the recession mean for property investors? You know look it really depends on your individual circumstances. It means potentially there's going to be opportunities. It means potentially interest rates are going to stay low okay so your cash flow should be okay. But it does mean that you know your tenants could lose their job and stop paying the rent. However and this is what I would say is you know when we went into the recession we told people if people weren't going to pay if tenants weren't paying you get that payment holiday underway and i'm still saying it to this day even though a lot of people think the first three months it's ended it actually hasn't ended yet. You can apply to your fund that and say I you know I want to pay my holiday because my thing and for any of our tenants I'm sorry any of our landlords if you're having difficulty you need a letter to send to your mortgage company we're more than happy to provide a letter that just basically says hey this is where it's at you know and you know please grant the main extension you know and certainly you know we're negotiating and that's actually one of the things we'll talk about a little bit later on is we're doing a lot of work to make sure we work out and understand where the tenant is at and then work out where we can go from there. And I think that's one of the keys you know it's being said a lot but look you know in terms of the recession the real risk for property investors is not so much on the cash flow side. I don't think although it could be if things got really really bad but certainly the government seems to be indicating that they'll do whatever it takes to support the housing market and if that means that there's lots and lots of you know tenants not paying all this sort of stuff the potential is that they will come in and support those tenants because they don't want an eviction crisis okay in which case the landlord gets paid so that's good.  So there's a number of things the real I think effect is number one is if you lose your job because of the recession okay but then we have and there's a calculator on the website you know if you go to tools onto our website gladfish.com and go to the menu and go tools and you'll see what happens as a scenario what happens if you lose your job and you can plug in some numbers and see what if you get your job with 30 percent you know drop in pay over three months that sort of thing you can play with those numbers. And I think that's really important the final thing is that capital values drop. Now I'll leave the rest of that for a little while and the reason I'll leave for a little while is because I'm going to deal with this towards the end when I talk about different areas and why I think you should be investing in certain areas and not other areas. The unfortunate news is if you've got stuff outside the major cities the trend is not good long term for those. Even though you know we're talking about working from home even though we're talking about zoom meetings even though we're talking about all these trends we should see people be able to stay out of the cities the reality is people want you know what's going on with the cities and that's and you know they're attracting the talent they're attracting stuff that's going on and that's all the fundamentals that mean house prices grow so but we'll talk more about that particular question most definitely.


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