We have all become aware that the cost of living has risen significantly since the beginning of 2021, having reached the highest recorded level since 1992. Energy prices and petrol prices, in addition to various other essentials, have become increasingly unaffordable for many households.
Within the lettings industry, there is the potential for tenants to alter their behaviour and priorities in response to the general rise in prices. This may also influence their ability to pay rent and their choice of property and location.
This can obviously have a knock-on effect to landlords and property managers, meaning expert, professional tenant and property management has never been more important. In this article we will explore how the cost of living crisis here in the UK could impact landlords, and outline the proactive steps being taken by Bourne to minimise any impact to their landlords during this difficult time.
Changes to Tenants’ Behaviour and Priorities
From a landlord’s perspective, it’s impossible to understand what will influence changes due to the cost of living crisis, without first understanding how tenants will be impacted.
Tenants are likely to experience the impact of the living cost crisis more severely than homeowners. The Office of National Statistics has found that renters are the group most likely to say that their households would not be able to cover unforeseen expenses, compared to those who own their homes.
We are regularly seeing headlines such as Inflation is rising at 9.1% in the UK, the highest rate for 40 years. The Bank of England has warned that inflation could soon reach 11%, as fuel, energy, and food prices soar.
Tenants are not only exposed to the cost of utilities and goods but also fluctuations in rent. If they don’t benefit from a related increase in salary or income, some may be left struggling to pay rent on time. This could lead to an increase in rent arrears across the whole of the lettings sector, so robust and careful management of timely rental receipts is increasingly required.
We are also likely to see a change in the priorities and needs of tenants too.
Smaller homes are likely to be more in demand than before, as downsizing may be viewed as one way to save money.
Potential tenants may prefer to move into a property with bills included, due to the hike in prices. Or they may seek out properties which are more energy-efficient, with better insulation and double-glazed windows to save on central heating bills. Properties which highlight areas of energy efficiency could be more appealing to potential tenants who are looking to control expenditure associated with the cost of living.
We predict a further influence on tenant’s property choice being their ability to live closer to their employment to reduce travel costs. Better access to public transport and the ability to walk or cycle to work becoming of greater importance. However, with more people working remotely post-pandemic, there will still be lots of tenants who don’t need to move to a city or big town to continue to work. Their proprieties will likely tie back to running a cost-efficient home.
Changes to Contracts and Rent
Rental pricing and what is included in housing contracts is also set to change.
The high inflation rate will generally cause an increase in rent prices countrywide. Additionally, due to the increase in utility bill pricing, all-inclusive rent prices are predicted to increase even more drastically.
At Bourne, we always focus on helping our landlords receive the best possible return for their investment, along with helping them protect their asset. Our experienced letting teams across our ten branches are well positioned to provide you with an accurate valuation for your specific property area. Local knowledge and careful analysis of the localised rental market is key to this. While it’s easy to make sweeping statements about the overall rental market across the UK, it is important to understand the market on a localised scale.
With potential tenants increasingly prioritising home searches around their job proximity, due to the cost of living crisis, this means they are increasingly looking at very specific areas. Letting agents who know their local areas in detail are critical in getting your property let quickly and to the right quality tenants. Our ever-growing network of branches across Surrey and Hampshire, together with an enviable number of contacts and associated estate agents across Greater London and the south of England, all go to ensure our clients receive maximum exposure when marketing their property in the immediate area and beyond.
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At Bourne, we are proud to consistently have one of the lowest rent arrears in our industry.
Our approach with tenants is personal and kept simple. An expert team in accounts ensure our communications are highly efficient and effective, to provide assurance to our landlords that their asset is in safe hands.
Should we occasionally have any tenants who struggle with rent payments, we work closely with them and the landlord to create payment plans to help them get back on track. This prevents uncertainty and difficulties in the future, minimises rent arrears and reduces void periods.
Communication amongst the chaos
Creating clear communication with our tenants ensures any impact is minimised. With centralised communications, we can clearly track all interactions, manage open conversations easily and ensure all parties are constantly updated. The Bourne Lettings Support Team, comprising Property Management, Lettings Admin and Lettings Accounts, has grown massively over the last few years, as services to our tenants and landlords becomes ever more focused on the complexities of professionally managing rental properties.
As times become more challenging for many tenants, here at Bourne we are making sure to check in with our tenants and send out regular communications letting them know what we are doing to support them. Happy tenants create less stress for landlords and open, consistent communication is a key part of that.
We believe it is essential for our landlords to have easy access to their Property Manager and Lettings Support team, with regular updates on their properties, so they have every confidence we are taking care of their assets.
The perfect match
Robust screening of potential new tenants is a process that we believe is imperative. We aim to match our landlord’s properties to tenants who will be respectful towards the property and be financially stable throughout the tenancy. This way, we can ensure your income is not impacted during the cost of living crisis and your property remains in great condition.
What Bourne can offer
Bourne offer our landlords three management levels of service, depending on how involved they like to be with the lettings process. The majority of our landlords opt for our Fully Managed Service which we hope to be hassle-free and where Bourne acts on your behalf as liaison with the tenants.
Alternatively, we offer a Rent Collect Service where we will collect the rent and should a tenant fall into arrears, actively chase this whilst also providing monthly rent statements for your accounts. On rare occasions, our third and final option is a Let Only Service for those landlords who are fully up to speed with the frequently changing legislation within the industry, have the time in successfully managing their own property and full understanding of the possible fines that could be imposed should any legislation not be followed.
Our dedicated team of staff are responsible for the care of our landlords’ properties for the duration of their tenancies. The Property Management Team focuses their efforts on building strong relationships with all our landlords, Tenants and Contractors, and looks forward to supporting many more new customers over the coming years.
As a landlord, if you are looking to successfully navigate your way through the cost of living crisis and protect your property asset, it has never been more important to work with professional agents and contractors. For up to date rental advice or to book a free valuation, contact your local lettings expert today who will always be happy to help.
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