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.
Probates
Probate Guide: How to Manage Estate Distribution With or Without a Will
Navigating the Nuances of Probate in the UK
Understanding Probates- UK 2024
Losing a loved one is hard enough without the added stress of sorting out their estate. If you are dealing with probate in the UK, it’s essential to understand the process, responsibilities and steps involved. This guide will take you through the probate process and give you all the information you need to manage it.
What is Probate?
Probate is the legal process of managing the estate of a deceased person. It ensures their debts are paid, and assets are distributed according to their will or the law if there is no will (intestate). An executor named in the will handles probate if there is a will. An administrator is appointed to manage the estate if there is no will.
What to Do When Dealing with Probate:
Register the Death
The first step is to register the death within five days in England, Wales, and Northern Ireland or eight days in Scotland. You’ll need a medical certificate showing the cause of death and should get several copies of the death certificate for future use.
Find the Will
If the deceased left a will, find it as it names the executor to manage the estate. The will says how the deceased wanted their estate to be distributed. Without a will, the estate will be distributed according to intestacy rules.
Apply for a Grant of Probate or Letters of Administration
To get the legal authority to deal with the estate, you need to apply for a grant of probate (if there’s a will) or letters of administration (if there’s no will). This application is made to the Probate Registry. You will need to fill in the following forms:
– PA1P (if there’s a will) or PA1A (if there’s no will): Application forms for probate or letters of administration.
– IHT205 or IHT400: Inheritance Tax forms depending on the value and complexity of the estate.
Value the Estate:
It would help if you valued the estate, including all assets such as property, bank accounts, investments and personal belongings. You also need to identify any debts and liabilities. This step is essential for calculating any inheritance tax due.
Pay Inheritance Tax:
Inheritance Tax (IHT) must be paid if the estate is worth more than the current threshold (£325,000 as of 2023). IHT must be paid within six months of the person’s death; otherwise, interest will be charged. You can pay IHT from the estate’s funds, or you may need to arrange a loan if the estate is poor in cash.
Apply for Probate:
Once you’ve completed the paperwork and paid any inheritance tax due, you can submit your application for probate to the Probate Registry. You’ll need to send:
– The completed PA1P or PA1A form.
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- – The deceased’s original will and any codicils (if applicable).
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- – The death certificate.
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- – The fee (currently £273 as of 2023, but check for updates).
- – Administer the Estate
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- – Collecting Assets: Get all the assets of the deceased.
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- – Paying Debts: Pay off any outstanding debts and liabilities.
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- – Distributing the Estate: Distribute the remaining estate according to the will or the intestacy rules.
- Record Keeping:
Keep a record of all transactions and decisions made during the probate process. This includes copies of correspondence, receipts and details of how you distributed the estate. Record keeping is essential for transparency and accountability.
Probate Problems
Disputes can arise among beneficiaries over the distribution of the estate. Mediation can often resolve these disputes without going to court.
Missing Assets
Assets can go missing. Thorough searches and professional help may be required to find all assets.
Complex Estates
Large or complex estates, especially those with foreign assets or business interests, can complicate the probate process. Professional advice from solicitors or accountants may be needed.
Insolvent Estates
If the deceased’s debts exceed the estate’s value, the estate is insolvent. In these cases, you need to seek legal advice on how to proceed to ensure debts are paid in the correct order.
Professional Help
Probate can be a daunting task, especially when you’re grieving. Professional help from probate solicitors or estate administration services can make it easier.
They can assist with:
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- – Filing Applications: Completing all forms and documents correctly.
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- – Valuing the Estate: Valuing assets.
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- – Handling Disputes: Mediation services to resolve beneficiary disputes.
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- – Managing Complex Estates: Navigating estates with foreign assets or business interests.
More Probate Tips:
Inform Beneficiaries
Keep beneficiaries updated on the probate process. Regular updates will prevent misunderstandings and disputes.
Secure the Deceased’s Property
Make sure the deceased’s property is secure and insured. This will prevent issues like theft or damage.
Stay on Top of Things
Use checklists and calendars to keep track of deadlines and tasks. Staying on top of things will ensure you don’t miss any critical steps in the probate process.
Why Understand Probate Laws
Knowing UK probate laws will make the process easier. Every case is different, and understanding the legal requirements will help you avoid common mistakes.
Summary
Probate can be challenging, but you can do it with the right knowledge and support. Each step, from registering the death to distributing assets, is essential to ensure the deceased’s wishes are respected and the estate is managed correctly.
If you’re feeling overwhelmed, get professional help to guide you. At the end of the day, managing probate with care and attention will give you peace of mind during a difficult time.
Contact us today for more information or to speak to one of our experts.
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!
