Reside Manchester MD "already seeing problems" with Job Retention Scheme
For many -- employers and employees alike -- the government's Job Retention Scheme has been nothing short of a godsend.
The announcement that the state would cover as much as 80 per cent of employees' wages -- up to £2,500 a month -- was something described by Rishi Sunak as "unprecedented". Never before in the history of the country had a British government paid people's salaries.
But while the raft of financial measures announced by the Chancellor some weeks ago now are comprehensive, they are by no means flawless.
We spoke to Anthony Stankard, Managing Director of award-winning estate agent Reside Manchester, who said that although the furloughing initiative was "very helpful indeed", he was "already seeing problems" with it.
"It seems obvious that at this stage SMEs -- I'm paying particular attention to estate agents -- will need the necessary cashflow to pay the whole of their salary run at the end of April," Stankard explained. "It seems like we will then claim the money back from the new HMRC portal at a later date.
"This will cause many small firms a huge short-term cashflow problem -- if these payments are not reimbursed by the end of May, I can see a great number of estate agencies not making it through."
But companies folding wasn't Stankard's only concern.
"The longer this lockdown continues, then the higher the number of furloughed staff that will be made redundant," He told The Parliamentary Review. "This is simple -- the volume of work available after the lockdown is over will not justify the same team size in many cases.
"So furloughing is actually just prolonging the inevitable," He concluded.
When asked about what he thought would happen in the residential property market once the quarantine was lifted, Stankard was wary that it wouldn't be an immediate return to form.
"Because the residential sector has been effectively brought to a standstill, agencies can't just return and 'switch the lights back on'. It doesn't work like that.
"We need to wait for confidence to return to the market, and then agree sales, get properties through a massively compressed conveyancing, banking and surveying process, take the deal to completion and then get paid. This will easily take another six months.
"There just doesn't seem to be any way that a small or medium agency can carry furloughed staff for another six months on full pay. The cash simply will not be there.
"I am by no means suggesting we end lockdown too early -- it just needs to be made clear that for estate agents, life will not just go straight back to normal -- it will take some time."
As for what Covid-19 means for buyers, Stankard warns there will be a "disconnect" in the market after the lockdown ends.
"There is already a large number of buyers reducing offers on properties they were in the process of buying pre-lockdown," He explained. "The sentiment, although unproven, is that there will have to be a 'correction' in pricing.
"Vendors will not want to accept that, and buyers will feel they are overpaying. Sales will fall, vendors will withdraw properties and the market will slow.
"All in all, we will see a downturn in the residential market -- making a further reduction in staff numbers unavoidable.
"It would be good to see something like a phased return in early May -- perhaps staggered teams working in alternate weeks to keep social distancing going in the office -- and this would help us get back to business as usual considerably earlier."