Landlords are a resilient bunch. The rental market is constantly changing, and yet they always find a way to stay on top of the situation.
In recent years, though, we’ve seen the introduction of the Tenant Fees Act 2019, eviction bans during the Covid-19 pandemic and lengthier void periods in general. Even the most thoroughly prepared landlords have had their own struggles with this list.
So our question is a straightforward one; are landlords feeling the effect of rental market changes?
Small changes are often manageable if landlords can take them on one at a time, but the sector has shifted monumentally in the last few years. It takes a cool head and clear strategy to stay in control of the situation.
We take a look at how rental market changes have altered the plans of landlords, and what can be done to stay ahead going forward.
The Tenant Fees Act 2019
The Tenant Fees Act 2019 came as a blow when it was first introduced. For newer landlords who are unaware, the Act stopped landlords and letting agents from charging their tenants for the cost of additional fees.
Under the Act, the only payments that can be charged are:
Early termination of tenancy payments
A £50 capped fee for changes in the tenancy
Utilities, communication services, TV licence and Council Tax
Default fees for late rental payments or replacing security measures (for example, changing locks after a tenant has lost a key)
And the following charges are disallowed:
Admin / Tenancy set up fees (such as reference checks, credit checks, contract renewals etc.)
Cleaning and gardening services
For many landlords and letting agents, their solution to combat the Tenant Fees Act was simply to charge more rent. After all, rental figures are set purely at the landlord’s discretion.
That said, having to pay more rent without getting anything in return isn’t fair. Residents knew this, and were willing to look for a new place to live. So, that left landlords with only one viable option; to give residents a better property in return.
There’s a lot to be said for sprucing up your rental property with residents in mind. Essentially, it’s investing in your investment. The more effort that goes into making a house feel like a home for your residents, the more likely they are to accept higher (and fairer) rental fees.
The Covid-19 pandemic affected almost every industry, and the UK rental market was no exception. As many renters found themselves made redundant or put on furlough, the Government stepped in and put a ban on tenant evictions. This was to stop landlords from evicting residents who couldn’t pay rent through no fault of their own.
However, landlords with only profit in mind are few and far between. Even before the ban was put in place, there were many stories on the news of landlords reaching out to tenants, reassuring them they would not be made homeless if they couldn’t pay their rent.
For the most part, the eviction ban — which ran from March 2020 to May 2021 — created a huge imbalance in the relationship between tenants and landlords. Some tenants who didn’t want to pay (even though they could) chose not to.
We recently carried out a survey with the help of the UK’s landlords to gain a better insight into the rental market. 11% of those we spoke to said the eviction bans had negatively affected their desire to remain as landlords. In the same vein, 11% also said 2021 felt like the right year to sell up.
Download Our Landlord Insights Guide
Discover which 11% you are.
Generally speaking, the eviction ban didn’t have a huge effect on the country as a whole. 62% of landlords said it didn’t change things, and 24% said it was just an inconvenience. But for the unlucky few, it has been a nightmare.
The Covid-19 eviction bans couldn’t have been prepared for, but it does highlight the importance of finding good, reliable tenants. A person’s character counts for a lot, and you need to be able to trust your tenants to do the right thing.
Longer Void Periods
Whether it’s a combination of Covid, higher expectations from residents or other rental market changes, there’s no denying the length of void periods has grown significantly.
Many years ago, it was a lot easier for landlords to find new tenants, but times have changed. There’s more competition, and potential tenants have more options. According to our survey, 72% of landlords in the UK expect void periods to last for at least one month. 6% even expect their voids to last longer than three months.
These longer void periods are naturally having an effect on landlords’ income. The average rental figure in the UK is £922. With a one-month void, that’s the minimum amount that landlords could lose out on.
When you take other ongoing costs into consideration such as:
Utilities (water, electricity, etc.)
The final loss per month could reach as high as £1500.
So, what’s the solution?
Make sure your residents don’t want to leave. They’re not just renting any regular building from you; they’re renting their home. You want them to fall in love with the place so the temptation to leave isn’t there. This means designing the perfect space, which we cover in our Landlord Insights Guide.
Staying in Control Despite Rental Market Changes
You can’t prepare for sudden rental market changes, but ensuring your property is up to scratch and your residents are reliable and trustworthy will certainly put you in a good position for most eventualities.
As in many situations, the best way to plan your approach is by carrying out research first. Before you decide whether to buy more rental properties, sell the ones you’ve got or stay as you are, make sure to read our free Landlord Insights Guide.
We detail the current state of play from the perspective of the UK’s landlords, so you can get a full grasp of the market from the point of view that matters most.
Download Our Landlord Insights Guide
Find out what other landlords are thinking for 2021.