Covid 19 Update Potential Long Term Change
How working from home may change the residential landscape
How has the Working From Home (WFH) trend been affected by Covid-19? Will migration into cities change going forward? Will the layout of our homes need rethinking and households become more energy conscious?
Covid-19 accelerates Working From Home(WFH) Trend
- Restrictions led to around 50%of employed adults WFH, with many businesses investing in technology to enable this.
- Benefits for both employees and employers; flexible working patterns likely to continue post-Covid lockdown.
- Implications for the residential market: affects locational preferences, property design, and energy usage.
Reduced geographical constraints for employees
- Established trends of migration into cities and surrounding commuter hubs to be tested.
- Cities are unlikely to lose appeal, particularly to young professionals.
- Yet WFH may extend ‘commuter hubs' as fewer office days allow for homes further afield.
The layout of our homes may need rethinking
- There will be a need for more designated office space and highspeed internet provision.
- A flexible approach from multifamily housing(MFH) operators to appeal to abroad range of occupiers.
Households will become more energy conscious
- More time at home will increase energy usage and therefore bills will increase.
- A home's Energy Performance Certificate can provide guidance on measures to improve efficiency.
WFH may bring wider social benefits
- Less commuter traffic may lower pollution.
- Broader labour market as greater WFH opportunities for single parents and disabled workers.
PANDEMIC ACCELERATES UNDERLYING TREND
Even prior to Covid-19 working from home(WFH) was on the rise, and has doubled over the last decade to 1.7 million people in 2019. During the lockdown, this rocketed to 50%of employed adults; around 16 million people. Recent surveys suggest many employees have enjoyed the experience and would like it to continue post-Covid. Many employers have invested in remote working technology and are increasingly comfortable with WFH.
The level of adoption will vary depending on a range of factors, including age and occupation. Young professionals tend to favour the office environment, for both the social and learning opportunities. In contrast, parents with young children might prefer the flexibility of WFH. Occupations that require collaboration benefit from an office environment, whereas task based jobs, such as in call centres, maybe more suited to WFH. It is more likely that many employees find a balance and split their time between the office and WFH.
BUT IS UNLIKELY TO CAUSE A MASS MIGRATION OUT OF CITIES
Given fewer days in the office, employees will have more flexibility over where they live. However, this doesn't mean a mass exodus, as cities remain our higher education, leisure, social and cultural epicentres. While WFH adoption will vary depending on life stage, established migration trends in and out of UK cities are likely to remain. Young professionals arriving for employment opportunities will continue to favour central locations. Families moving out in search of more space and schooling options — the 30-44 age cohort and their children — account for some 65%of net outward migration. While big changes are unlikely, this could rise going forward given recent developments and greater flexibility of working.
LOCATIONAL PREFERENCES MAY CHANGE
Many factors influence the actual choice of location, but for London commuters there is a tradeoff between property price, travel time and travel cost. Recent CBRE research found that that a ten minute increase in travel time to London reduces the average property price by around £22,000, reflecting the premium for a short commute. However, an ability to WFH more may dissipate the need for shorter commute. Being less geographically constrained enables a move to a cheaper location, further away from London, so a bigger house can be bought for the same budget.
Consider Beaconsfield, identified as the most expensive commuter town, at £570psf. It has a short 30 minute train journey into London, perfect for daily commuters. Moving just 30mins further out, to cheaper Aylesbury, could mean being able to buy a home that is 60% larger for the same budget. This doubling in travel time may suit someone who WFH a few days a week. The options would be opened up further if home was a permanent work location. Swapping Esher for Devon, or Harpenden for Suffolk, could mean a property over double the size for the same budget. With this in mind, WFH has the potential to change the shape of traditional commuter belts.
INTERNAL LAYOUTS WILL COME UNDER MORE SCRUTINY
WFH alters the demands on our homes, both in terms of space and configuration. As British homes are among the smallest in Europe, the internal layout becomes critical. The need for designated WFH space maybe easily solved for the 52%of owner occupiers are‘under-occupied', that is have two or more spare bedrooms. While in these homes a spare bedroom can be used as office space, a large share of these properties will be empty nesters and retirees. Yet ‘under-occupation' is lower and decreasing, at 14%, in the rental sector.
There is an opportunity for developers and multifamily housing providers to reconsider both unit layouts and amenity offer to facilitate more WFH. One option might be to provide flexible space to allow the occupier to set the configuration. But space itself might not be enough, light and outside space will also be important. Recently placemaking has been layouts with the same enthusiasm a focus in the property industry, perhaps now is the time to relook at the internal layouts with the same enthusiasm.
BEING AT HOME MEANS WATCHING THE BILLS...
Households WFH will increasingly become more energy conscious. If we are in our homes more, our energy usage will increase, as will our energy bills. To save money, households could improve the energy efficiency of their homes. This could have the added benefit of reducing carbon emissions.
Understanding a homes Energy Performance Certificate(EPC) is key. An EPC is provided whenever a property is bought or rented. It sets out how energy efficient a property is and provides an indication of energy costs. Properties are given an A to G rating, where A is the most energy efficient. D properties make up the largest share, accounting for 38%of housing stock; on average the annual energy costs for a D rated property is £889. Improving your home to a C rating would reduce energy costs to £584 per annum, cutting bills by a third. These improvements cost in the region of £680, so it would take 2.2 years to payback the improvements. This would be offset quicker if householders are WFH and using more energy.
THERE WILL BE WIDER SOCIAL BENEFITS
WFH may also bring some wider social benefits, including lower pollution from less commuter traffic. Recent data shows the levels of ‘tiny particle pollution' and Nitrogen Dioxide pollution in London and Birmingham have fallen by a third since the lockdown. With no commute, WFH also provides an opportunity to improve the work-life balance, with more time to spend on leisure activities and with family and friends.
Another benefit is it may open up the labour market. For example, single parents face clear challenges associated with inflexible work schedules commuting distances and availability of childcare. According to the Office for National Statistics(ONS), there are around 2. 9 million single parents in the UK, 90%of which are women. Estimates suggest around a tenth of unemployed single parents want to work, but are unable. Disabled adults also have a higher unemployment rate than the wider population. WFH may help alleviate some of the constraints and allow these groups to enter the workforce.