With financial pressure set to stay with us throughout 2023, what can landlords do to maintain their rental income while supporting tenants?
Concerns over the rising cost of living are shared by both tenants and landlords. Many people are having to cope with higher outgoings, whether in the form of rent, energy bills, mortgage rates and food prices.
A key issue for any landlord feeling squeezed by higher borrowing costs on their property is how to sustain the regular flow of rent payments so as to avoid arrears.
Here, we have put together five useful tips:
Have an open, honest discussion with the tenant about energy and utility bills. If these are included as part of the rental agreement, shop around to check the property is benefiting from the best price. If not, switch and consider passing on all or some of the saving. If the tenant manages such bills themselves, and perhaps took on the current provider either from you or a previous occupier, again you could encourage them to shop around for a cheaper deal and so save money. You could also discuss with your tenant the range of assistance schemes the Government has made available in recent months to ensure they are making best use of these.
Ensure the energy performance of the property is as good as it can be. Currently all residential rental properties must have an EPC, Energy Performance Certificate, at a rating of ‘E’ or above. It remains the government’s intention that this will rise to a minimum of a ‘C’ rating for new tenancies from 2025 and for all tenancies by 2028. While investing to improve energy efficiency presents an upfront cost, there are grants, subject to eligibility, available to help and, in the long run, a property with a good rating will be more attractive to tenants because energy costs will be more affordable.
Be cautious about proposed rent rises. It is understandable to want to increase rent given the economic situation. However, before doing so, consider your tenants’ ability to pay against the value and care they add to the property. Ask yourself if having the property empty for a month or two between tenants, if the present occupier couldn’t afford the increase, would cost more than keeping the rent as it is. If you do opt for an increase, perhaps because you are facing higher borrowing costs, consider what adjustments or improvements to the property would make it justifiable. In the event that your tenant falls into arrears, subject to circumstances, agreement of an effective payment plan to help bridge short term financially difficult periods can potentially avoid additional legal costs and reletting fees.
Manage risk. Remember the property market is characterised by competition and tenants can always exercise their right to leave you. You can mitigate the risk of this by ensuring the property is well maintained at all times. Keep it tidy and pleasant to live in. Depending on responsibilities under the tenancy agreement, you should ensure there are regular visits from a gardener and window cleaner. If a tenant decides to renew their contract or remain in the property on a periodic tenancy following the end of their fixed term, it can be a nice touch to send in a professional cleaner to give the property a freshen up.
Show empathy. Either beginning a relationship through Chinneck Shaw or direct contact, it’s essential to make sure the tenant feels empowered to disclose damage or issues with the property when they arise. If wear and tear is caught early it can save you money and grief down the line while ensuring the property is somewhere the tenant is happy to live in. As the tenancy progresses, be empathetic when tenants communicate reasonable requests, such as non-permanent additions to the interiors, or a small, non-invasive pet. This way you won’t miss out on quality tenants who will respect the space.
For more information on the lettings market and how Chinneck Shaw can help you as a landlord, visit our ‘Let’ pages. You can also stay up to date by receiving our quarterly newsletter.