RICS 2020 Impact of COVID-19 on UK Property & Construction Market Survey

Our first survey of RICS professionals on the impact of COVID-19 is unsurprisingly consistent with wider market sentiment relating to the UK’s economy and commercial activity.

RICS Professionals surveyed across the UK reported a decline in business with 80% seeing a decreased workload and 67% seeing a decrease in new business enquiries. Reduced cash flow is being experienced by 69% and just under half of the profession, 49% is now working from home rather than on site or an office location. Just over half had been furloughed in April with 51% not currently working and a further 5% made redundant. Only 1.1% of the profession had experienced no impact of COVID-19.

• Workload reduced since lockdown measures put in place
• 65% of construction projects delayed with half of sites closed
  
• 25% of clients electing to take property off the market
  

Projects have understandably been much affected with 69% project delays reported. RICS professionals have seen 47% of construction sites close and 29% of projects cancelled. There have been challenges around the valuation of projects with 29% unable to provide a property valuation. Additional challenges have been experienced with clients requesting or declining site visits against the policy of the contractor. Some project work has supported infrastructure development due to the COVID-19 pandemic with 2.4% RICS professionals directly involved in NHS projects.

With UK market confidence falling sharply and strict lockdown measures in place momentum in the real estate sector is experiencing significant decline. The commercial market has been particularly impacted due to closure of retail, leisure and office premises. An increase in requests from occupiers for rent and business rate suspension has been reported with 33% clients seeking a rent holiday and 13% occupiers seeking help with service charge payments. In April 25% of clients were taking property off the market and 9% were experiencing challenges with FM service resourcing with people isolating or on furlough. 3% of clients have taken up dispute resolution services resulting for the impact of COVID-19 on their property transactions.
In the residential property market 16% of homebuyers were requesting delays on their completion date in April.

In the context of this insight from our profession since the start of the COVID-19 lockdown, RICS has undertaken a significant programme of proactive Government engagement and advocacy.

We have had some significant wins – from support for our firms with the Treasury to winning the argument on extending high street rate reliefs to property agents with MHCLG, to building consensus with BEIS on the construction and infrastructure sectors. This work continues, not just with Westminster, but the devolved administrations in Edinburgh, Belfast and Cardiff. We are in regular contact with Ministers and officials to share our insights and provide expert advice on policy and legislation proposals.

Housing Supply

RICS led on the general guidance for home moving with MHCLG and residential industry bodies and responded to the Housing, Communities and Local Government Committee inquiry into the impact of the COVID-19 crisis on homelessness, rough sleeping and the private rented sector; and MHCLG’s consultations on First Homes and the review of the ban on the use of combustable materials in and on the external walls of buildings.

We discussed COVID-19 measures to maintain market momentum with the new shadow housing and planning minister, Mike Amesbury MP and briefed the shadow home office minister responsible for policing and the fire service in advance of the Fire Safety Bill’s second reading.

RICS also had a very positive discussion with Homes England on residential development delivery; and we have fortnightly calls with the organisation.

Commercial property/High Street Renewal

RICS responded adversely to the UK Government’s decision to postpone the business rates revaluation and have been discussing the implications with Scottish Government officials should the Scottish Government follow suit.

RICS was contacted directly to provide oral evidence for the Commons Public Accounts Committee inquiry on Local Authority Commercial Investments, and our written evidence to the Committees Public Administration and Constitutional Affairs Committee regarding their inquiry into the government’s management of its major projects has been published on their website

We met with Welsh Government on next steps for landlords and agents to cope with financial pressures for both themselves and tenants, and policies they are looking to introduce to help landlords handle rent arrears. RICS was a key consultant on this, with us feeding in directly to the pros and cons of their proposals.

We continue weekly dialogue with MHGLC officials on the impact that Government measures are having on the commercial sector and we work with colleagues in the Property Industry Alliance (PIA) to ensure a consistent and comprehensive approach is taken to the commercial property sector
Construction

RICS’ joint professional body letters to devolved nation Construction Ministers were well received by the press and industry stakeholders.

Through RICS’ membership of the Construction Industry COVID-19 Forum in Scotland, we have pushed for the Scottish Government to introduce a Government-led public sector maintenance programme. Further policies on post-pandemic recovery are in development

RICS have been engaging with the Scottish Shadow Housing Minister to discuss the gradual reopening of construction sites in Scotland.

The Profession

The Financial Conduct Authority (FCA) issued inspection guidance which references RICS updated guidance in light of COVID-19.

We wrote to key ministers and advisers in No10, HMT and BEIS to raise concerns around the availability and cost of professional indemnity insurance.

We are currently working with lenders and regulators including the Financial Conduct Authority (FCA) and have asked for Government support to ensure the industry remains trusted; maintaining consumer confidence now and into a post COVID-19 economy is vital to the recovery of the sector

RICS has written to the Permanent Secretaries of NI Government Department for Finance and the Economy, and the Northern Ireland Commissioner of Valuation, to update on important guidance recently published by RICS to help chartered surveyors deliver valuations that adhere to Government advice, in line with the RICS Valuation – Global Standards Red Book.

We have been liaising with Scottish Futures Trust on the future of consultancy and have agreed to regular communications to ensure that professionals lead built environment projects in Scotland.

Further information on our ongoing activity can be found here.