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Coronavirus impact on commercial property and real estate

Coronavirus: The impact on UK property and real estate

The ongoing coronavirus (COVID-19) pandemic continues, with far-reaching effects on people, travel, supply chains, and economies. We’re in unprecedented times and impact of the outbreak is implicating the real estate market both worldwide and here in the UK.

As the coronavirus crisis affects our businesses, working/buying habits and living situations, a very practical question arises. 

What do these additional pressures mean for the UK real estate market?

Coronavirus impact on the high street

The UK high street, shopping centres, and out-of-town shopping outlets were already struggling in 2019, with consumer behaviour shifting towards greater reliance on online shopping – a trend that was predicted to continue through 2020.1 

Now, with the Government lock-down in effect forcing all but essential retailers (such as grocery stores and pharmacies) to close their doors to the public, the pinch is being felt more than ever. Even the stores that are able to remain open have experienced disruption to their supply chains, and consumers are less likely to visit physical retail stores due to fear of infection.2 Ocado has reported a surge in orders and delayed fulfilment times due to demand.  

If the outbreak cements online buying habits, retail stores may find it unnecessary to have big high street/shopping centre premises. This could mean that in the future tenants review their own requirements for renting premises and the amount of space that they require. Which of course could ultimately have an impact on landlords.3

Conditions for unoccupied properties

Because of Government restrictions, many business have closed temporarily which has resulted in buildings being left unoccupied. Despite this, landlords still have responsibilities to comply with the terms of their policies to ensure they're not breaching their insurance cover.

If your insurance policy has unoccupied / security conditions and your property has been unoccupied prior to the COVID-19 outbreak, then the usual security conditions required by your insurer are the same as before. These conditions will require at least weekly visits, removal of combustible waste, switching off gas, water and electricity and letterboxes sealed. You should refer to your policy wording for the exact requirements defined by your insurer.

If because of the outbreak you are unable to comply with the policy requirements then you must contact your insurance advisor as your insurers need to be informed.

For premises that have become unoccupied during the COVID-19 outbreak due to Government restrictions, insurers are relaxing their policy requirements for the time being. During this period, insurers will continue to review their position.

Landlords and tenants alike will understandably have concerns over their rights and responsibilities during this time. If you are in any doubt concerning requirements imposed on your policy, please contact your insurance advisor.

Mortgage payment holidays

One of the measures introduced by the Government to protect those with mortgages to pay was a three month ‘mortgage holiday’, whereby those experiencing financial difficulties during the Covid-19 crisis will have three months’ worth of mortgage payments pushed back. This has been extended to buy-to-let mortgages, which is good news for both buy-to-let landlords, and the tenants inhabiting their property who may also be experiencing financial difficulty. At the end of the three-month period, renters and their landlords will be required to work together to commit to an affordable repayment plan that takes into consideration the individual circumstances of the tenants.4 

Working from home and the impact on offices

In our downloadable Property Barometer we discussed how demographics are not only impacting ‘how’, but also ‘where’ people work, with the traditional office block becoming less and less practical for modern day employers. With Covid-19 forcing those who can work from home, this will likely hasten the shift towards flexible working and the related transformation of office floor space, even once the virus has been contained.

We mention in our Property Barometer that for owners and fund managers, adapting to this workplace evolution is critical. Covid-19 could accelerate those plans, forcing them to rethink how they best utilise their physical assets.

In the ever-changing world we currently live and operate in, it is still too early to fully assess the impact of coronavirus on the UK real estate market. Much will depend on the duration and severity of the outbreak. To keep up to date with information on how the COVID-19 pandemic is affecting polices and the potential implications for your business, visit our Coronavirus Resource Centre, which is updated regularly.


  1. gov.uk/future-high-street-fund
  2. propertywire.com/impact-of-coronavirus-outbreak-on-uk-real-estate
  3. theguardian.com/morrisons-speeds-up-payments-to-small-suppliers-because-of-coronavirus
  4. gov.uk/complete-ban-on-evictions-and-additional-protection-for-renters