According to the Residential Landlords Association an average of 55% of tenancies terminate every year. Each tenancy termination comes with expenses that range from cleaning costs to possible repairs. The void period (i.e the time that the home remains vacant n between tenancies) can be especially costly, especially when that income is relied upon to service any mortgage commitment. Then there are utilities and professional fees that can all add up the longer the unit is vacant. For every day that your investment is vacant, its costing you money.
A high turnover of tenants will cost you time, effort, and money. Reducing or eliminating your turnover expenses by keeping good tenants longer can help you to be a more profitable landlord. There are many advantages to keeping tenants longer:
1. Reducing tenancy termination expenses
2. Consistent rental income
3. Spending less time and effort preparing the unit for rent (maintenance, cleaning and agency fees)
4. Avoid the uncertainty of a new tenant
Keeping tenants for longer
Considering the practical and economic benefits to keeping a tenant in your property for as long as possible, it’s worth while adding value to the place, thus increasing its appeal. In practical terms, this exercise will cost less than it does to re-let the property once it becomes vacant. The good news is that not all motivating factors will cost you money.
Here are my 5 top tips:
Keep your tenant happy by being proactive with property maintenance and routinely performing property inspections, ideally once every 3 months.
It can be very frustrating for tenants living in a home with unaddressed maintenance issues. Problems don’t age well, deal with them when they are are small. Tenants will appreciate a prompt response and it shows that you care about their living experience in your property. This can be a big deciding factor when your tenant is considering a renewal. Having the carpets steam cleaned or having the place professionally cleaned makes a considerable difference and need not break the bank.
Additionally, dealing with maintenance as soon as it arises means less time, money and effort is spent on sorting things out when the time comes to re let. Regular inspections of the property and checking on all fixtures and fittings while help to highlight any issues that your tenant may not have noticed and to pre-empt anything that may create bigger issues in the longer term.
2. Be on your game
You shouldn’t underestimate the importance of the personal touch when it comes to tenants. Your renters will be more likely to want to stay if you’re proactive and personable.
Be prompt with your responses and make it easy for the tenant to contact you. Maintain open communication to reduce misunderstandings and create a better overall tenant-landlord relationship. Being approachable and proactive goes a long way in making your tenant feel comfortable in your property.
For example, if you need to get repairs done, aim to have work carried out in your tenant’s absence. This will minimise the inconvenience and make it far more tolerable for your tenant, especially if solutions can be brought about quickly. Ultimately, you need to put yourself in their position and provide the tenant a service that you would expect to receive.
If you’ve made a pledge to get something repaired or replaced before they move in, then make sure you honour it. It’s all about building trust, the tenant is your customer, and like all customers, if they’re not happy, they’ll vote with their feet.
3. Know your customer
For many tenants, especially for younger Brits lifestyle quality is a major factor in whether they decide to stay or go. You may own the property, but the tenant should be able to consider it their home. There are ways you can create the ambiance, and in doing so, you position yourself as a value added provider of accommodation.
Offering features that tenants care about most will help you attract better long-term tenants and serve as an incentive for them to renew their tenancy. Cosmetic upgrades like hardwood flooring, kitchens with all appliances and a modern, efficient bathroom make a house feel like home. These upgrades along with bright, neutral decor are the crucial aspects that tenants make judgements on when deciding to rent a home.
While there are upfront costs involved, you are adding value to your home, thus increasing its appeal. By offering something people aspire to, it will attract the best quality tenant and achieve a premium rent. The private rental sector has become an overcrowded and fiercely competitive marketplace, your home is offered in competition with not in isolation to others in your local area.
4. Be proactive with renewals
Contact your tenant 3 months before the tenancy is up to asking them if they want to renew. Even if you don’t get a response right away, it might get them thinking about their plans early so they can give you more notice. In most cases, it will help you to plan ahead and get the place listed and shown over to minimise your void period. Equally, if your tenants have been living there for several years and you plan to renovate, it would be an effective use of your time to plan ahead by having trades come in and give you quotes and timescales.
Whilst maximising the income is important, it’s always wise to take a view on things; if the local market has risen, by all means ask for an increase that’s fair to both sides, bearing in mind the affordability factor. Likewise, if the local market is showing signs of slowing, increasing the rent on a reliable and trustworthy tenant could put you at risk of losing them. Keeping the rent the same, in some cases, may have long term practical and economical benefits for both you and your tenant.
Good communication throughout the tenancy will help when it comes to the renewal process. Your tenants will be more likely to open up about any concerns they may have and what will incentivise them to stay.
5. Encourage a longer tenancy
Consider asking the tenant to sign a longer term tenancy at a reduced rate. If they renew every six months, extend the tenancy to a 12 months. If they renew yearly, consider extending the tenancy for two years at a reduced rate. While this method could mean you lose out on the profit from rent increases, it could be worth it to keep a reliable tenant longer. As with all money matters, crunch the numbers, so you know what option is best for you.
Retaining reliable, rent-paying tenants is good for your rental business. By encouraging good tenants to renew their leases, you’ll avoid the costs associated with vacancy and have the peace of mind that comes with keeping tenants who you already know will pay their rent on time and will respect your property.
Naturally, people choose to rent for the flexibility it offers, and sometimes, despite your best efforts, there will be tenant turnover. It’s an occupational hazard. Next time you are looking for new tenants, if you are a self-managing landlord, as a matter of good practice it’s wise to meet your tenants prior to them moving in, regardless of how good their references may be.
If you’d like to know more about buy-to –let or would be interested in working with me, I can advise you on a range of things; from how to maximise the income potential from property, where and what to buy.
Call the office on 020 8366 9777 or drop me a line [email protected]