All That Glitters…….

Latest landlord News By: Madalena Penny

Rent-savvy landlords are picking up on the markets demand for rented accommodation it appears.  Not by increasing rents as you would expect but by capitalizing on tenant-demand by securing reliable and constant tenants and offering them longer tenancies for a reduced rent.

Indicators by landlord experts, Legal 4 Landlords have revealed that an increasing amount of independent landlords are choosing long-term strategies to avoid rent arrears and at the same time rental voids on properties.

Offering tenants longer tenancies ranging from 1-year + in exchange for reduced rents, landlords are able to stabilize any fluctuation that may arise in the private rented sector.  By keeping rents at an achievable level for tenants, they are aware that they will experience less arrears and achieve an acceptable income from the property, keeping a landlord-tenant balance within the lettings market.

As rent arrears are expected to rise this year owing to benefit caps, job losses and a stagnant economy, shrewd landlords are quick to see that rent increases induced by tenant-demand may on the surface look very tempting but the reality of a constant stream of steady rents set at a higher price being met by tenants is unlikely.  In the long run it could very well be a false economy and result in eviction costs, vast arrears and rental voids.

The one thing certain this year as revealed by private rented sector research is that tenant-demand will increase.  Unless a significant improvement is seen in buy-to let lending and less restrictive BTL products being introduced to the market, demand for tenanted property again will outstrip supply and in turn increase rents.

Senior Partner, Sim Sekhon of Legal 4 Landlords said:

“Landlords choosing to offer longer tenancies in return for reduced rents is a sensible option and could result in stability and security for both landlord and tenant.  However it should be stressed that before offering tenants longer tenancies, all the relevant checks and referencing should be completed.”

Although property services, LSL reported a 1.2% decline in rental values for December, they are confident that rents will once again increase come Spring.  With a noticeable increase in rent arrears since October, the rise in rents could be perceived as a strong indication that tenants are beginning to struggle to meet payments.

With that in mind, landlords need to remember that tempting as it looks, applying rent rises will only count if they can ensure that rent will be paid.