As inflation rises and looks set to continue in that direction for the next 12-24 months, both landlords and tenants are seeing a big change in their circumstances. Everything is becoming more expensive, eating into tenant’s salaries and landlord’s profits, which is creating a lot of uncertainty.
As you prepare and plan for the coming months, we’ve put together some top tips for landlords to help you tackle the ongoing cost of living crisis.
Check your costs
Review your current expenditure to see what you are spending each month and other periodical costs across the year. Prices look set to continue rising over the next 12-24 months, so it makes sense to plan. Negotiating contractor and service rate deals that remain fixed for a certain period is a good place to start. If you can change your mortgage provider, shop around to see if you can find a better deal before interest rates rise even further.
Invest in your property
It’s never a bad idea to invest in your property, and while maintenance costs may be higher, it remains as important as ever.
As a landlord you have a legal obligation to ensure the property remains in good condition, while carrying out upgrades encourages tenants to stay. Even if they move out, a well-maintained property is easier to rent than one that has been neglected.
There may be some sensible alterations that can be made, such as improving the insulation, which can not only help to keep energy costs down, but also improve the energy rating and overall value of the property.
Speak with your tenants
Try to maintain good communication and relations with your tenants during this period as it makes things easier for both parties. Keep a record of any discussions and update your tenants about important issues as and when needed.
The more transparent you can be with them, the more they should be with you, which could be important as finances start to become increasingly strained over the coming months.
Before the next energy bill hike in October, you should sit down with your tenants to discuss where things stand and discuss things like:
- How do they feel about personal circumstances over the coming months?
- What are they likely to pay for their next energy bill and can they afford it?
- Are they able to look at alternatives to lower their costs?
What’s likely to happen with costs for the next few years?
There is still a lot of uncertainty about where things are heading, although experts have predicted that energy prices and inflation will continue to rise through 2022 and 2023. Tenants will be forced to use more of their disposable income on their bills and it will likely make it more difficult for some to pay their rent each month.
Landlords that are unable to raise rents in line with inflation could see profits reduced as maintenance and property costs increase in real terms, profits could also be worth less. While the next 12-18 months look challenging, the Bank of England have predicted that inflation should return back to around 2% by 2024 as the current causes fade away.