Landlord Tips
Should You Chase Higher Rent or Keep Good Tenants? The Dilemma for UK Landlords
Should You Chase Higher Rent or Keep Good Tenants? The Dilemma for UK Landlords
The UK rental market has been all over the shop recently, and many landlords are torn between keeping long-term tenants or replacing them with new tenants who can pay higher rents. This blog will go through the pros and cons of both so landlords can make an informed decision that suits their financial goals and property management style.
Market Update
The UK rental market has been going mad for various reasons, including economic shifts, changes in legislation, and the lingering effects of the COVID-19 pandemic. With high demand and low supply, rents are going up in many areas, and landlords are thinking of capitalising on these higher rents. However, long-term tenants offer stability and reliability, too. Let’s get into the pros and cons.
Pros Of Keeping Long Term Tenants :
Stability and Certainty
Long-term tenants give you a steady and predictable rental income. This stability is especially important in uncertain times. Cash flow helps you manage your finances and plan for future investments.
Established tenants who have proven to be reliable and respectful of the property are gold dust. Building a good relationship can mean better care of the property and fewer disputes. Long-term tenants are likelier to adhere to the tenancy terms and pay rent on time.
Lower Turnover Costs
Tenant turnover involves costs such as marketing the property, viewings and applications. These costs are minimised with long-term tenants. Avoiding frequent tenant changes also means less wear and tear on the property and, therefore, less maintenance and refurbishment costs.
Trust and Reliability
Established tenants who have proven to be reliable and respectful of the property are gold dust. Building a good relationship can mean better care of the property and fewer disputes. Long-term tenants are likelier to adhere to the tenancy terms and pay rent on time.
Community and Reputation
Long-term tenants are part of the community within the property or neighbourhood and enhance its reputation. Positive word of mouth from happy tenants can attract other good tenants in the future.
Cons Of Keeping Long Term Tenants:
Below Market Rent
Long-term tenants may be paying below-market rent. This means potential lost revenue, especially in hot rental markets. Rent increases for existing tenants are often restricted by law or need to be negotiated, which can be tricky.
Opportunities Lost
Keeping rents low for long-term tenants means missing out on the opportunity to get the most out of the property. In hot areas, landlords could get much more by renting to new tenants at current market rates.
Flexibility
Long-term leases can limit a landlord’s flexibility to change the property or adapt to the market. Some landlords prefer the flexibility to change terms and conditions more frequently, which can be easier with shorter leases.
Pro Of Replacing Tenants for Higher Rent:
More Rental Income
The main advantage of replacing tenants is charging current market rent. More rental income can increase a landlord’s return on investment and cash flow.
Market Alignment
Regularly reviewing rental rates means the property’s income potential aligns with the market, maximising profitability. Higher rents can cover increased costs like property taxes, insurance and maintenance.
Lease Terms and Conditions
New tenancies mean you can update the lease terms and conditions to reflect current legislation and best practice. You can include clauses to protect your interests and address specific issues.
Cons Of Replacing Tenants for Higher Rent:
Higher Turnover Costs
Tenant turnover involves costs such as marketing, tenant screening and potential loss of rental income during vacancy periods. Refurbishing the property between tenancies can also be expensive and time-consuming.
Risk
New tenants come with uncertainties, such as their reliability and behaviour. Screening can help but doesn’t eliminate all risk. Higher turnover means more disputes and potentially more legal and administrative work.
Longer Vacancies
Higher rents may price some tenants out of the market, resulting in longer vacancies. Longer vacancies mean lost income and can impact the property’s overall profitability.
The Decision
When deciding whether to keep long-term tenants or replace them with new ones at a higher rent, landlords should consider several factors, including current market conditions, financial goals, property management preferences and tenant relationships.
Financial Goals
Landlords must evaluate their financial goals and whether higher rents fit their long-term investment strategy. For some, stability and predictable income may be more important than higher returns. For others, maximising rental income is the priority.
Market Conditions
Understanding the local market is key to making a decision. Landlords should research rental trends, vacancy rates and tenant demand in their area. In areas with high demand and low vacancy rates, replacing with higher rent may be more possible.
Tenant Relationships
Good tenant relationships are worth it. Landlords should consider the trust and reliability of their current tenants and weigh up the benefits of keeping them against the risks of new tenancies. Long-term tenants mean peace of mind and less management stress.
Rent and Tenant Retention Strategies :
Rent Increases
Gradual rent increases can help balance the benefits of higher rent with the stability of long term tenants. Transparency around the reason for the rent increase can build goodwill and understanding.
Incentives
Offering incentives such as property upgrades, flexible lease terms, or loyalty discounts can encourage long-term tenants to stay while justifying small rent increases. Happy tenants are more likely to accept rent increases.
Lease Options
Offering flexible lease options such as shorter terms with higher rent or longer terms with stable rent can cater to different tenant preferences and market conditions. Flexibility can attract new tenants and retain existing ones.
Conclusion
Balancing higher rent with good tenants is a delicate decision that requires many considerations. Both have their pros and cons, and the right strategy depends on individual circumstances and market conditions.
For UK landlords in the current market staying informed is key, prioritise tenant relationships and align your rental strategy with your long term financial goals. You can have stability, profitability and tenant satisfaction by getting the balance right.
Ready to make the most of your rental property? Explore our detailed guides and resources to enhance your property management skills and investment strategies.
Landlord Tips
Estate Agency Fees for Rental Properties in the UK
Understanding Estate Agency Fees for Rental Properties in the UK
Understanding estate agency fees is vital when renting out your property, whether landlord or tenant. Estate agents offer excellent service, but their fees vary depending on the required service and level of support. In this article, we will look at the typical fees charged by estate agents for rental properties in the UK, the various services, and the factors that affect the cost.
Estate Agency Services
Full Management
For complete management services, the estate agent will manage the entire rental property on behalf of the landlord. This includes finding tenants, collecting rent, managing maintenance and repairs and dealing with tenant issues or disputes.
Tenant Find Only
Tenants find only services the estate agent will find suitable tenants for the landlord’s property. Once the tenant is found and the tenancy agreement is signed, the estate agent’s involvement usually ends, and the landlord takes over the management of the property.
Rent Collection
Rent collection services: the estate agent will collect the rent from the tenant on behalf of the landlord. The landlord will still be responsible for the property and any maintenance or tenant issues.
Extra Services
In addition to the services listed above, estate agents may offer extra services such as property inspections, inventory management and legal advice. These services may incur extra fees or be part of a complete management package.
Fees
Location
Estate agency fees can vary depending on the location of the property. Agents may charge more in areas with high demand and high rental yields to reflect the market conditions.
Property Type and Size
The type and size of the property can also impact estate agency fees. More significant properties or bedrooms will require more marketing and, therefore, higher fees.
Level of Service
The level of service required from the estate agent will also affect the fees. Complete management services will usually cost more than tenant-find-only or rent collection services.
Market Conditions
Market conditions such as supply, demand, and rental trends can affect estate agency fees. Agents may adjust their fees to attract landlords or tenants in a busy rental market.
Reputation and Experience
Established and experienced estate agents may charge more because of their reputation and service. Landlords and tenants may be prepared to pay more for the security of working with a well-known agent.
Fees
Tenant Find
For tenant-find-only services, estate agents will usually charge a one-off fee based on a percentage of the annual rental income. This fee can be between 8% and 12% of the first year’s rent but will vary depending on the agent and location.
Full Management
Complete management services will cost more than tenant-find-only services. Estate agents may charge a percentage of the monthly rent, usually between 10% and 15%. Some agents may charge extra for specific services like property inspections or maintenance coordination.
Rent Collection
Rent collection services usually cost less than complete management as the estate agent’s involvement is limited to collecting the rent. Fees for rent collection services can be between 5% and 8% of the monthly rent.
Extra Services
Extra services offered by estate agents, such as property inspections, inventory management and legal advice, may incur extra fees. These fees will vary depending on the service.
Negotiating Fees
When dealing with estate agents, landlords and tenants can negotiate fees based on their circumstances and requirements. Factors such as the number of properties the agent manages, the length of the tenancy agreement and the level of service required can all be considered during negotiations.
Summary
Estate agency fees for rental properties in the UK will vary depending on the service required, location and size of the property and market conditions. Knowing the services offered by estate agents and the factors that affect fees will help landlords and tenants make the right choice. By reviewing the services and negotiating fees, landlords and tenants will get value for money and service from their chosen agent.
At Argant Estates, our expert agents across London offer tailored services to get your property tenanted in less than a week. Don’t miss our exclusive 7% full management deal—call us today for a free valuation!
Landlord Tips
Is Rent Guarantee Insurance Worth It?
Is Rent Guarantee Insurance Worth It?
Are you a UK landlord? If so, you’ll know the nightmare of tenant defaults. Losing rental income is a big worry even in prime areas like London and Greenford. That’s where rent guarantee insurance comes in as a lifesaver. Rent guarantee insurance has become very popular among landlords to protect their rental income and mitigate the risks of tenant default. But like any insurance product, rent guarantee insurance has its pros and cons. In this guide we’ll look at the advantages and disadvantages of rent guarantee insurance so you can make an informed decision if it’s right for your investment properties.
Benefits of Rent Guarantee Insurance
Financial Protection
Guaranteed Income
Rent guarantee insurance gives landlords a safety net by guaranteeing a steady income if the tenants don’t pay or vacate the property unexpectedly. This is especially useful for landlords with big monthly outgoings like mortgage payments.
Protection from Default
In the event of tenant default the insurance policy will cover the unpaid rent, reducing the financial impact on the landlord and keeping cash flow going. So you won’t have to dip into your savings to cover unexpected losses.
Risk Reduction
Tenant Vetting and Screening
Many rent guarantee insurance policies include tenant vetting and screening to help landlords find reliable tenants with good credit and rental references. This reduces the risk of default and stress of tenant management.
Legal Expenses Cover
Some policies cover legal expenses for evictions or disputes with tenants, so landlords don’t have to pay high legal fees. This is especially useful in high risk areas where evictions are more common.
Feeling Good
Less Stress and Uncertainty
Knowing the rental income is protected gives landlords peace of mind and reduces stress and uncertainty especially during economic downturns or tenant turnover. This means a better rental experience for both parties.
Continuous Income
Rent guarantee insurance provides a steady income stream even during vacancies or when the property is not generating rental income so landlords can meet their financial commitments. This stability means landlords can plan better.
Ease and Convenience
Flexible Payments
Many insurers offer flexible payment options so landlords can choose monthly, quarterly or annual premiums to suit their needs and cash flow. This makes it easier to budget.
Convenience of Management
With the financial side of property management covered by insurance landlords can have more convenience and focus on other aspects of property ownership like maintenance and tenant relations. This means a better all round rental experience.
Disadvantages of Rent Guarantee Insurance
Price
Premiums and Excess
Rent guarantee insurance can be expensive especially for landlords with multiple properties or high value rentals. Some policies may also have excesses to pay before cover applies. You need to weigh up the cost against the benefits.
Coverage
Exclusions and Conditions
Rent guarantee insurance policies have exclusions and restrictions on the types of properties, maximum rental amount insured or circumstances under which the cover applies. Landlords need to read the terms and conditions to understand the exclusions and conditions.
Provider
Insurer’s Reliability
Landlords rely on the insurer to honour claims and provide help when needed. If the insurer has financial problems or goes bust landlords may struggle to get cover.
Claims
Complexity and Delays
In the event of tenant default landlords may experience complexity and delays with the claims process with the insurer. Clear communication and documentation is key to speed up the claims process and reduce disputes.
Summary
Rent guarantee insurance gives landlords financial protection and peace of mind by providing a steady income and reducing the risk of tenant default. But it comes with costs, exclusions and dependencies that landlords need to consider before buying. By weighing up the pros and cons and doing their research landlords can decide if rent guarantee insurance is right for their investment properties and financial goals. Ultimately it’s all about individual circumstances, risk tolerance and long term investment goals.
Get in touch with experts or other landlords to learn more about rent guarantee insurance. Decide now and avoid future headaches and a better rental
experience.
Landlord Tips
How to Evict Tenants – UK 2024
How to Evict a Tenant Who Won’t Leave
Evicting a tenant who won’t leave is one of the most stressful things a landlord must do. Navigating the legal process and paperwork can seem overwhelming, but you can do it efficiently and legally with the right guidance. This guide will help UK landlords understand their rights and responsibilities when evicting tenants so you can have a smooth and fair eviction.
The Legal Reasons for Eviction:
Before you start the eviction process, you must understand the legal reasons for eviction under UK law. These reasons depend on the type of tenancy agreement.
Assured Shorthold Tenancy (AST)
Most residential tenancies in the UK are Assured Shorthold Tenancies (AST). Under an AST, there are two main legal reasons for eviction:
Section 21 Notice (No-Fault Eviction):
-When to Use: To regain possession of the property after the fixed term or during a periodic tenancy.
-Notice Period: At least 2 months.
-Requirements:
-Must be in writing.
-The landlord has complied with their legal obligations, such as protecting the tenant’s deposit and providing the necessary certificates and guides.
Section 8 Notice (Fault-Based Eviction)
-When to Use: When the tenant breaches the tenancy agreement (e.g. non-payment of rent, property damage).
-Notice Period: 2 weeks to 2 months, depending on the grounds for eviction.
-Requirements:
-Specify the exact grounds for eviction.
-Provide evidence.
Assured Tenancy and Regulated Tenancy
Other types of tenancy, such as assured and regulated, have different and often more complicated eviction procedures. Legal advice may be needed for these cases.
How to Evict a Tenant Who Won’t Leave
1. Serve the Right Notice
Serving the right notice is the first step in the process.
Section 21 Notice
-When to Use: To regain possession at the end of a fixed term or during a periodic tenancy.
-Requirements:
-Use Form 6A if the tenancy started after 1 October 2015.
-The notice must specify the date of leave.
-Can be served by hand, post or email (if permitted by the tenancy agreement).
Section 8 Notice
-When to Use: When the tenant breaches the tenancy agreement.
-Requirements:
-Use Form 3.
-State the grounds and date of leave.
-Serve by hand, post or email (if the tenancy agreement allows).
2. Wait for the Notice Period to Expire
Once the notice is served, wait for the notice period to expire. If the tenant doesn’t leave voluntarily, move on to the next step.
3. Apply for a Possession Order
If the tenant doesn’t leave, you must apply to the court for a possession order.
Standard Possession Order
-When to Use: Most eviction cases include rent arrears and other breaches.
-Process:
-Fill in form N5 (online or paper).
-Pay the court fee (£355).
-Submit the application.
Court Proceedings:
-The court will review the application and list a hearing.
-Both parties will present their case.
-If granted, the tenant will be given a leave date.
Accelerated Possession Order
-When to Use: For Section 21 evictions with no rent arrears claim.
-Process:
-Fill out form N5B (online or paper).
-Pay the court fee (£355).
-Submit the application.
Court Proceedings:
-The court will review the application without a hearing.
-If granted, the tenant will be given a leave date.
4. Enforce the Possession Order
If the tenant still doesn’t leave after a possession order is granted you may need to use bailiffs.
County Court Bailiffs
-When to Use: When the tenant doesn’t leave after the possession order.
-Process:
-Apply for a Warrant of Possession.
-Bailiffs serve an eviction notice to the tenant.
-Bailiffs evict.
High Court Enforcement Officers (HCEOs)
-When to Use: This is for faster eviction after a High Court approval.
-Process:
-Transfer the possession order to the High Court.
-HCEOs serve an eviction notice to the tenant.
-HCEOs evict.
Eviction Process
It’s important to document everything throughout the eviction process.
Keep Copies of All Notices
Keep copies of all notices and proof of service (e.g. postal receipts, emails).
Record Communications
Record all communication with the tenant, including conversations, emails, and letters.
Property Inspection Reports
Keep detailed records of property inspections before and after the tenancy.
Legal Help and Advice
Evicting a tenant can be legally tricky. Consider the following options:
Consult a Solicitor
Solicitors who specialise in landlord-tenant law can offer advice and representation.
Using Mediation
Mediation can resolve disputes without court action.
Joining a Landlord Association
Landlord associations offer resources, advice and support for managing tenancies.
How to Prevent Future Eviction Issues
Preventing eviction issues starts with proper tenant selection and clear agreements.
Tenant Screening
-Check references and credit history.
-Interview to gauge reliability.
Clear and Comprehensive Tenancy Agreements
-Be clear on everything.
-Include clauses on rent, maintenance and behaviour.
Good Communication
-Build a good landlord-tenant relationship.
-Deal with issues promptly and professionally.
Eviction Costs and Finances
Evictions can be expensive. Be prepared for:
Legal Fees
Solicitor fees can add up, especially in complicated cases.
Court Fees
Filing for possession orders and warrants costs.
Lost Rent
Consider lost rent during the eviction process.
Tenant Rights
Respect tenant rights to avoid legal issues.
Notice
Tenants must be given proper notice before eviction proceedings.
Fair Hearing
Tenants have the right to present their case in court.
Right to Safe Habitation
Landlords must ensure the property meets safety and health standards.
What to Do Next
If you’re facing tenant eviction problems, consider:
1. Get Legal Advice: Consult a solicitor.
2. Join a Landlord Association: Get access to resources and support.
3. Download Forms: Get the eviction forms from official sources.
4. Improve Screening: Improve your tenant screening.
Summary
Evicting a tenant who won’t leave can be tough, but understanding the process and following the rules makes it manageable. Knowing your rights and responsibilities will protect your property and interests and a fair and legal eviction.
Get in touch. Or join a landlord association. They can help.
