Change strategy to avoid a plague on all our houses - David Alexander comment

The wake of the financial crash of 2008 wasn’t a particularly good time to be an estate agent, pub landlord, restaurateur or events planner.

Thursday, 15th October 2020, 7:00 am
Without an effective vaccine there is no way out of this but there is, surely, a way through it, Alexander believes. Picture: Jane Barlow/PA Wire.
Without an effective vaccine there is no way out of this but there is, surely, a way through it, Alexander believes. Picture: Jane Barlow/PA Wire.

Estate agents were probably the worst affected due to a slump in residential property values and a tightening mortgage regime. But it also had a rippling effect on people’s ability to afford eating out, pub nights with pals and various organised social events from black tie dinners to bar mitzvahs.

Fast-forward to 2020 and hospitality is the sector taking the biggest share of Covid-inspired pain, especially given the current restrictions imposed by the Scottish Government, which has closed down most pub and licensed restaurants and severely restricted the ability of the remainder to trade. Some might call it “lockdown, mark two” in all but name.

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But just as the financial crisis filtered its way through residential property to hospitality so, surely, will the reverse happen as a result of the way the authorities have decided to deal with Covid-19.

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No need to ‘panic’ buy or sell - David Alexander comment

On the face of it, my sector has had a good summer, relatively speaking of course. The end of lockdown revealed the pent-up demand among the general public to move house, which was complemented by the Land and Buildings Transaction Tax (LBTT)/Stamp Duty “holiday,” the job-rescuing furlough scheme and reducing Covid-related infections, hospital admissions and deaths. While not naïve enough to believe the crisis was over, there was a feeling that the country – and its economy – could still function until a vaccine was found.

What we had not anticipated was a government U-turn that seems related solely to new infections rather than fatalities which, though rising, are nowhere near the rate of spring and early summer. Consequently, given the size of our hospitality sector and importance to the Scottish economy, its current virtual closure (which for some businesses may not be temporary), is bound, eventually, to have a negative effect on housing affordability (in both the sales and rental sectors).

The furlough scheme being greatly reduced in size and financial help from next month plus the scheduled ending of the LBTT/Stamp Duty concessions at the end of March can only compound a bad situation. So, despite trading as near to normal without interruption since July, there is no feeling of complacency among estate and rental agents and the various other businesses whose livelihoods depend on the property market.

Strategy

So what is to be done? Without an effective vaccine there is no way out of this but there is, surely, a way through it. When the crisis developed with amazing speed last March, I was fully in favour of lockdown on the basis that the virus was such an unknown quantity and the threat to lives so great that concerns about the economy had to take second place. But I now believe we have to live with the situation, albeit on the basis of businesses and individuals acting in a way that protects them and others.

This is partly based on recent professional and personal experience. Most of our employees are currently working from home, but the nature of the business does require some in-office duties to be carried out. Recently, two members of staff among the latter tested positive for Covid-19 and the rest of us (myself included) had to quarantine for two weeks. In both cases the symptoms the people experienced were mild, they have since been given the all-clear and normal working has resumed.

I accept not everyone infected has been as fortunate as these two employees, but their experience is fairly typical of the great majority of those who have contracted the virus. Consequently, I’ve become convinced that if just a fraction of the money spent by the Chancellor on keeping mothballed businesses afloat was spent instead on perfecting “test and trace” and on protecting the elderly and others at greater risk from Covid, then public sector debt would not have risen to north of £2 trillion (yes, trillion!) and hundreds of thousands of private sector workers would not now be facing Christmas without a job.

And perhaps fewer people would be in danger of dying from cancer, heart disease and other life-threatening conditions due to delayed diagnosis. Covid-19 has often been described as Britain’s greatest crisis since World War Two. Back then, with cities devastated by aerial bombing, a popular catchphrase was, nevertheless, “business as usual”. Maybe it’s time to revive it.

David Alexander is managing director of DJ Alexander

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