With rents in the UK continuing to rise, the tenant experience is hugely important right now. How can landlords attract and retain good tenants?
Experienced property investors and landlords are probably already aware of the importance of keeping tenant turnover to a minimum in order to maximise profits, but it might not be something that first-time investors have thought about.
Void periods cost landlords money as no rent is being received while the property sits empty, while the landlord is also liable for any interim bills. What’s more, the search for new tenants can be time-consuming and costly, so once you’ve secured a good tenant, keeping them should be a priority.
Keeping an eye on what today’s tenants are looking for is therefore important, and there is some common ground between numerous surveys in terms of the biggest selling point for tenants. In the latest research from OSB Group, the top three factors for tenants have emerged as location, flexibility, and landlord relationship.
Location is top focus for investors and tenants
Anyone embarking on a new property investment will have probably given the most thought to a property’s location. This will influence the price of the property, the potential return on investment through capital appreciation and rental yields, and how strong the level of rental demand is.
Investors often find the most success when focusing on specific locations with good transport links, or close to good schools if investing in family accommodation. For investors looking at city centres, the target tenant tends to be young professionals, so it is important to keep this in mind when selecting a property.
Likewise, tenants place a huge focus on location. For many, buying in their preferred location would not be an option due to the cost, but they are able to rent there instead, giving them the opportunity to live where they want.
In OSB’s survey, more than half (54%) of tenants said they were currently living in their preferred location, while just 8% said they weren’t happy with where they live. A further 78% of respondents said they felt at home in their current area.
The flexibility of renting
One thing that renting offers over homeownership is flexibility. You can move house much more easily if a new job presents itself or your personal circumstances change, or even move to a completely new area in order to ‘try before you buy’ by renting for a year or so first.
This is something property investors should take into account, too, although the aim is always to keep good tenants renting your property for as long as possible. This may influence the type of tenant you want to target, as students or new graduates may move house more frequently than older tenants or families.
Interestingly, OSB’s survey looked at the idea of ‘buyer’s remorse’, with 61% of recent first-time buyers saying that homeownership restricts the areas they can afford to buy in. A further 60% said owning a home was less flexible than renting, while 31% of new homeowners who had been renting said they would prefer to rent right now.
However, homeownership is still an end-goal for a huge number of tenants, with 84% stating they would get a greater sense of security from owning their home, while 82% are excited by the prospect of creating a home to suit their personal tastes. A further 78% note that it is a good financial investment.
Landlord-tenant relationship
The third aspect of renting that was flagged up as important for tenants in OSB’s report was the relationship between the tenant and the landlord.
While some investors may prefer the hands-off approach and choose an agent to manage any tenant communications, it seems that being more hands-on could be beneficial. The survey found that tenants who have direct relationships with their landlords have a significantly better experience.
There is a fairly even split between properties that are managed externally and those that are managed by the landlord, but 83% those who deal directly with the landlord are happy with the level of contact they receive, while 76% feel that their landlord cares about their service levels.
This compares with just 49% who were happy with their contact when the property was managed by an agent. Therefore, investors should consider whether they have the time and expertise needed to self-manage, or if not, to prioritise maintaining some form of positive communication with their tenants.
