The Covid-19 pandemic has had a significant impact on virtually all aspects of the UK economy, and it’s likely that the effects will be felt for months, or even years, to come.
And this includes the commercial property market.
What does it mean for the commercial property market?
During the initial lockdown back in March, the commercial property market was hit hard, with widespread lockdowns coming into force throughout the country. The vast majority of businesses were asked to shut their doors completely, or encourage their workforce to work from home, leaving many commercial buildings up and down the country, standing empty.
Data collected has already indicated that less than half of tenants paid their rent on time on June Quarter Day, meaning commercial property landlords only collected 38 percent of their rent.
The situation is still very unstable and the threat of a second wave of the virus, with the possibility of further regional lockdowns is very real. With this in mind, we anticipate prices and demand will fluctuate for at least the next few months as the market adjusts to the ongoing economic environment.
How have commercial property prices been affected?
There’s no denying that the retail and commercial property sector have been hit the hardest and this naturally has had an impact on commercial property prices. Experts predict that rent arrears will not only be an ongoing issue but the capital value of many commercial properties could also fall by as much as 20-30 percent.
Essentially, things are still very uncertain. However, for first time buyers in particular, this could mean there are some great deals to be found.
What does this mean for commercial mortgages?
Commercial mortgages have been a hot topic during the pandemic as they have been a great way to purchase property, or refinance a property that’s already owned. Many business owners are contacting commercial mortgage lenders for additional borrowing, for reasons such as:
- Securing a better interest rate
- Recouping funds
- Reducing monthly costs
- Gaining financial support
- Taking advantage of the spike in the market
However, it’s important to be aware that, as with in the residential property market, commercial lenders have become far more cautious as the UK heads towards another recession. With this in mind, if you are considering purchasing a commercial property during the pandemic, you can expect lower loan-to-values and more stringent affordability checks.
That said, there are still plenty of lenders out there to choose from.
If you’re looking to take your first steps on the commercial property market, or you’re planning on selling your property and looking to secure finance, we can help you find the best deals around. Get in touch to discuss your property finance needs.