If you have good renters, even if they're looking to slightly reduce the rent due to their current financial situation, you should consider tenancy renewal. If you can afford it, it’s better long term to drop the rent 3-7% and support people that you know will take good care of the place than risk the uncertainty of advertising for let. Especially when there’s no guarantee you will achieve higher rent and you risk lengthy void periods.
2. Prioritise longer lets and good renters over higher rents
Snap up reasonable offers from good renters. Getting trapped in a lengthy void period will hit you in the wallet more than temporarily lower rent. For example: On a two-bedroom flat in E14 rented for £2,500 per month, taking a 7% cut to keep a good renter would see you £400 better off over 12 months than if you let them go, and face a void period of a month while looking for a new renter. That’s without taking into account the costs accrued across the void period for council tax, utilities, marketing, mortgage etc.
With longer contracts, consider adding a clause that allows you to review rent after 12 months. This will give you a natural time to revisit rent prices with your renter.
3. Take out rent insurance
You can take proactive steps to protect yourself if your renters fall into arrears. A rent insurance policy will pay out if your renters are unable to cover the rent.
These are harder to get at the moment because of the increased risk, so stringent referencing is a must - not just because bad actors try to exploit slower markets to rent properties, but because it will make it more likely you’re accepted when applying for insurance if you can demonstrate your referencing is thorough.
4. Consider mortgage payment holidays
If you would benefit from a mortgage payment holiday, consider taking one. However, remember you are just deferring payment and the costs will mount up. Be aware that while the FCA has confirmed that your credit file shouldn’t be impacted by taking one, lenders can still take it into consideration when making future loan decisions.
If you’re passing some rent reductions on in this period to renters, make sure you make a clear agreement with them and be aware that if they don’t honour this agreement down the line you could be exposed. It’s worth adding an addendum to your rental contract setting out clearly how long the rent reduction will last, specifying that rent is being deferred, not cancelled, and details of your agreed repayment plan.
5. Cut costs in the right places
In this environment make sure you’re working with the best people for you – and this includes your lettings agent. Ask questions about how they’re finding renters in a tough market, how long their average void period is and compare their fees to others in the market.
Consider hybrid agencies that use a tech-enabled approach to reduce fees, friction and increase transparency while placing people into properties faster. With Home Made, for example, the average placement takes 8 days, from listing to an agreed offer, 14 days faster than traditional agencies for 60-90% less in fees than competitors.
6. Point renters towards financial support
If your renters are struggling to pay bills, make sure they’re aware of the financial help that is available to them. Point them towards organisations and experts who can help them budget, access aid and benefits. Citizens Advice is a great place for them to start.
7. Adapt your offering for the new normal – highlight outside and WFH space
Outdoor space has shot to the top of renters’ wish lists. After being forced to spend so much time indoors, people have really come to value access to outdoor space. Any property with a garden, balcony, roof terrace, or proximity to a park should manage to do well as we emerge from lockdown – highlight these in your listings.
8. Increase your market by changing your renter profile
Most landlords have a set of renter requirements they stick to. But consider widening these.
If traditionally you rented your two-three- bedroom home to families or couples, consider widening to sharers - focusing on quality of renter over securing a specific type. With multi-occupant spaces, focus on making the most of larger personal space areas, prioritising spacious and well-equipped bedrooms over living rooms in shared houses.
That said, make sure to check your local authority regulations before you do anything. Some councils require licenses to be purchased for multiple occupancy households, and these can be expensive, so factor this in before making the switch.
9. Be pet friendly
The past few months have been somewhat lonely for a lot of people, so more renters are looking for companionship in the form of a dog or cat. Landlords willing to be flexible with their pet policy should have an easier time letting their property, as the supply available for pet owners is low. They’re generally willing to pay more and it’s worth remembering that renters with pets stay at a property for much longer than those who don’t - around 80% longer – allowing you to recover some lost income with longer term renters.
Pets do tend to cause a little more wear and tear, so consider hardwood floors over carpets; and new furniture better suited to withstanding the impact of pets to limit damage to the home.