As suggested here on 27 March, the level of grace under Covid-19 pressure will define reputations post-pandemic: that decency, or lack of it, will be remembered on the far side. Four weeks closer to the far side, grace and its twin virtue, decency, continue to predominate.
Realistic landlords and decent tenants are reaching pragmatic agreements. Decency towards staff within commercial agency is being demonstrated, to the credit of employers. However, do pause a moment to think of the thousands of staff on uneasy furlough. There is a sense that well-capitalised agents can ride this out for three to six months. But that is only the current best-guess for how long this virus will last.
There are examples of disgraceful behaviour, of course. Hair-trigger landlords issuing summons to cash-strapped tenants. Tenants that can well afford to pay, pleading poverty.
On Monday, terms to end what could become a bloody high street war were offered up to the chancellor in a joint letter from the British Property Federation and the British Retail Consortium. The ‘furloughed space grant scheme’ uses a formula to funnel government rent money to retail and hospitality tenants. A quarter of rent and service changes if turnover is down 40% to 60%; the lot, if turnover is zero. But landlords are deemed ‘wicked’ in Whitehall. At a guess, the Treasury will say no.
Anticipating the future
Meanwhile three sorts of guessing games are in full swing, first, by those who think they know which way their market will swing. This is a compressed – and therefore slightly more dangerous – game investors and funds always play. But what might feel like clever anticipation today may turn to ‘what the hell were we thinking?’ next April. “How will the pandemic change property?” describes the guesses being made by all and sundry, mostly by those talking up their own book. Harmless enough, as long as you use the ‘why are they saying that?’ rule to dismiss 80% of the opinions.
More worrying are the guesses valuers will have to make, either at the end of June or come September, a guessing game with real consequences. What’s a temporarily shuttered shop worth? A pub with no customers? Flexible office space filled with ghosts? Does no rent equal zero value? No idea.
Valuers will likely find the odd deal to give comparisons. Would it not be better if RICS came out with guidance that goes well beyond advising members to hedge their guesses with ‘material valuation uncertainty’ clauses? Yes, regulated banks have promised not to enforce covenant breaches too rigorously. But what about lenders that are unregulated? Their borrowers face bankruptcy from guesses essentially drawn from thin air.
PS: what the hell are these more eminent members of my trade doing at the daily Covid-19 briefings? Their 20/20 hindsight and demands for 20/20 foresight from politicians and scientists are appalling. What a bunch of clever-dick back-seat drivers! They seem to think their ramblings are deep insights. I tend to stride out of the living room in a muttering rage after a few minutes. Then I look in the hall mirror.
Peter Bill is a journalist and author of Planet Property
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