Buy-to-let landlords will have to face reducing rents by at least 5% in the run up to 2024, as many tenants will not be able to afford their current payments because of the economic meltdown and widespread redundancies.

@thica via Twenty20

A prop-tech rental start-up’s data forecasts the imminent recession caused by the pandemic that landlord’ losses will reach a staggering £5.75bn by 2024. This will be four times the amount of losses incurred by landlords during the 2008 recession of £1.3bn.

The firm also analysed rental value trends after the worldwide financial crisis and transposed these figures to 2020 to predict what the losses could be incurred by landlords and BTL investors; it forecasts that rental income will not attain pre-coronavirus levels until at least 2024.

London is going to take the majority of the brunt, with a rental income fall projected to be 9% the equivalent of £3.9bn to landlord before recovering to the Jan 2020 rental values; Westminster, Tower Hamlets and Wandsworth will be hit the hardest..

Ranking Borough Income Lost 2020-2024

1 Westminster £304,667,261

2 Tower Hamlets £219,278,314

3 Wandsworth £216,807,552

4 Camden £176,863,748

5 Kensington and Chelsea £159,765,450

6 Islington £159,206,498

7 Barnet £158,097,786

8 Southwark £151,973,442

9 Hackney £146,424,710

10 Newham £144,838,620

11 Ealing £137,853,158

12 Lambeth £135,771,019

13 Brent £134,018,334

14 Haringey £130,628,144

15 Enfield £124,736,459

16 Redbridge £114,542,049

17 Hammersmith and Fulham £109,515,217

18 Lewisham £105,034,697

19 Harrow £96,557,644

20 Merton £96,454,528

21 Greenwich £93,498,919

22 Croydon £92,663,076

23 Bromley £91,909,956

24 Hounslow £86,100,705

25 Richmond upon Thames £84,732,049

26 Hillingdon £82,051,320

27 Waltham Forest £73,186,504

28 Kingston upon Thames £71,480,925

29 Sutton £52,253,096

30 Barking and Dagenham £50,672,175

31 Havering £46,619,056

32 Bexley £46,179,880

Asaf Navot, founder of the firm, said: “Landlords across the UK need to brace themselves for reduced returns. In a recession, renters with tighter budgets are less inclined to take a risk and move homes due to reduced disposable income and increased job market uncertainty which drives rents down - and the Covid-19 recession looks likely to hit harder than any in living memory.”

He recommends that landlords should act quickly by securing longer tenancies with their current tenants, which could protect them from making major losses.

Another suggestion for landlords is to plan for longer term income stability rather than short term objectives, by lowering rent for longer contract so tenants can plan their budgets for the future.

Navot added: “Highlight any outdoor spaces, consider allowing pets in the property [pet owners stay around 80% longer in a rental property] and adjust the space for home working. This will all help you stand out and let your property in a slower market.

“We’re yet to see the full extent of the recession and it’s likely to be a renters’ market for the foreseeable future, but this is far from doomsday.

“The good news is rental property is a more robust investment than others in a recession, protected from the extreme peaks and troughs of the sales market as people still need to rent homes, even if they’re cutting on other costs such as travel and leisure.

“Renters are still enquiring, and landlords who are willing to compromise and prioritise longer-term income and smart cash flow management over short term profits – at the same time as streamlining their operations to cut costs – are most likely to succeed.”

Richard Merrick of PIMS, said: "The article is of course London centric and the majority of the UK, will not be affected by rent decreases as members seem relatively positive in spite of the coronavirus.

“The continued positivity may well hinge on the Renters Bill being introduced next year and the abolishment of Section 21 notice’s timescale.”