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How the weather is affecting your rentals

by Alysha Taylor SmithPosted on

In recent years, the impact of climate change has become increasingly apparent causing unfamiliar weather events across the world, including the UK. With the unpredictability of summer weather changing between heatwaves and large downpours of rain, how can landlords ensure they are prepared?

Rising Utility Costs

Fluctuating temperatures contribute towards higher utility costs and tenants may rely more on electricity to cool or heat their living spaces, leading to increased utility costs for landlords and tenants alike. Higher temperatures can result in increased water usage, further burdening the electrical grid and city resources, thereby escalating costs. Landlords offering bills included should carefully consider the monthly charge to make sure that it covers expected usage. 

Coastal Risks

Coastal towns are particularly vulnerable to weather impact, such as flooding and rising sea levels. The structural integrity of properties in these areas is at risk, and the demand for property insurance increases alongside repair bills. Landlords letting properties near the coast, particularly in areas with rougher seas (for example, Cornwall) should seriously consider implementing measures to protect their properties in the case of flooding – Or even consider moving to inland investments.

Property Damage and Market Appeal

Weather-related property damage can significantly impact a landlord’s bottom line. Continuous exposure to weather-related calamities can make properties located in high-risk areas less attractive to potential tenants. Renters are increasingly considering the risks associated with extreme weather events, making properties in these locations less desirable. Consequently, selling properties in such areas may lead to reduced profits or even losses, as real estate prices tend to drop in climate-impacted regions. It may be a good idea to look forward to the future and aim to predict which areas are likely to suffer from weather damage in the long-run to adjust your property investment strategy for better long-term success.

Changing weather patterns caused by climate change pose significant challenges for landlords in the UK. Being proactive and implementing climate-resilient measures can help landlords protect their rental properties from potential damages and maintain their market appeal. Constructing energy-efficient buildings, reducing energy consumption, and embracing sustainable practices are crucial steps in mitigating the impacts of changing weather on rental properties. By adapting to these challenges, landlords can safeguard their investments and contribute to a more sustainable future.

Reasons for new landlords to join the buy-to-let market

by Alysha Taylor SmithPosted on

The rental market is experiencing continued demand, with indications pointing to this trend continuing in the long term. With lower numbers of rental properties than potential renters on the market, the rental market is set to become even more competitive causing difficulties for young renters looking for suitable accommodation.

What do landlords have to gain from the current rental supply imbalance? 

Reduced Vacancy Periods

With a higher demand for rental properties, landlords can enjoy shorter vacancy periods. Properties are more likely to be rented out sooner, minimising the time properties remain unoccupied. This ensures a steady stream of rental income and mitigates the financial strain associated with prolonged vacancies.

Selective Tenant Screening

The growing demand for rental properties allows landlords to be more discerning in their tenant selection process. Landlords can carefully screen potential tenants, choosing those with excellent rental histories, stable incomes, and responsible behaviour. By selecting reliable tenants, landlords can minimise the risks associated with property damage and unpaid rent, ensuring a smoother and more profitable rental experience.

Increased Rental Prices

The competitive rental market resulting from rising demand empowers landlords to charge higher rental prices. As demand surpasses supply, landlords gain leverage to adjust rental rates to match market conditions. Higher rental prices enable landlords to maximise their return on investment and boost their profit margins, leading to increased financial stability and growth.

Expanded Profit Margins

The combination of shorter vacancy periods and higher rental prices contributes to expanded profit margins for landlords. By reducing the time a property remains unoccupied and optimising rental rates, landlords can achieve a more favourable return on their investment. These improved profit margins create opportunities for further property investment, property maintenance, and enhancement of rental offerings.

The increasing rental demand in the market has a positive impact on landlords in various ways. Landlords benefit from shorter vacancy periods, enabling them to generate consistent rental income. They can also be more selective with tenants, reducing the likelihood of property damage and rent arrears. Additionally, the competitive market allows landlords to charge higher rental prices, leading to improved profit margins. With careful management and adaptation to market trends, landlords can thrive in the evolving rental landscape. Additionally, as more landlords enter the market the supply and demand crisis will inevitably level out, causing positive knock-on effects for tenants. 

How landlords can increase rental prices fairly

by Asif AliPosted on

Average rental prices are increasing across the country with rental demand outweighing housing supply, but how can tenants cope with rising rental prices? And what can landlords do to protect their investments? 

Almost two-thirds of UK landlords will be forced to raise rental prices by at least 10% within 2023 if market conditions don’t improve. Increasing rental prices is a necessity for landlords seeking to protect their profits, but this will be at the expense of tenants who are unable to keep up with rising costs teamed with the cost of living crisis. 

Research by Aldermore Bank found that landlords are conflicted about increasing rental prices at this rate during such a challenging financial time for tenants; with 64% of landlords stating that they would be worried about their tenants being able to keep up with increased monthly payments. 

Guidelines on increasing prices for your existing rentals 

For landlords who are in a position where increasing rental prices is necessary, the below guidelines must be followed to ensure fair and legal practice and to minimise negative consequences for either party. 

  • Tenancy agreements should always include how and when rent prices will be reviewed. Landlords are responsible for ensuring they follow-out the agreed pre-agreed process for increasing rent. 
  • Landlords must seek permission if they want to increase rental prices by more than previously agreed. 
  • Rental increases must be fair and realistic in consideration of local rental prices.

If the tenancy agreement does not state the procedure for increasing rental prices, landlords can: 

  • Increase the monthly rent of a property when the lease is renewed. 
  • Agree a rental increase with the tenant where the tenant must provide a signed written agreement of the rental increase. 
  • Use a landlord notice to increase rent after a fixed term has ended. 

Long-term solutions 
Whilst landlords are facing many serious short-term challenges which are driving up rental prices, landlords should continue to think about their investments with a long-term perspective.

Whilst landlords generally seem concerned about rising living costs, Aldermore’s study revealed that 54% of landlords still feel optimistic about the future. Additionally, it continues to be widely accepted that buy-to-let investments are still a stable way to make a good income.

By making intelligent investment plans, avoiding panic-decisions on current rentals and preparing properties for the future (such as improving energy efficiency), there is still a bright future for buy-to-let landlords in the UK.

New limitations on social housing rent increases

by Asif AliPosted on

Driven by inflation and high rental demand, rental prices are increasing across the country. But what does this mean for landlords? And what are your limitations when considering rental increases? 

Social Housing rental increases 

Housing associations are considering the impact of rental increases for social and affordable housing tenants; several options are now being considered to offer support to tenants dealing with these price increases. Most notably, new limitations are being implemented in 2023 to cap rental costs for social housing tenants. 

Why does action need to be taken? 

Monthly rental costs for Social housing are permitted to increase by up to CPI plus 1% annually. However, in August 2022 the Bank of England forecast that CPI would be 9.9% in Quarter 3 of 2022, suggesting very significant rental increases would be permitted in 2023-24. These increases will inevitably cause significant pressure for some social renters as they struggle to keep up with the price increases. 

In October 2022, the UK government launched a consultation to cap these social housing rental increases in 2023. The consultation proposed to protect existing social tenants from significant rent increases in 2023 by capping social housing rent increases from April. The consultation considered rental increase caps at 3%, 5% and 7% in response to these concerns. 

Whilst many social housing providers might independently choose to cap property rental below CPI plus 1%, imposing a rental increase ceiling would provide protection for tenants who are in exceptional circumstances. 

The Government has now confirmed that these rental increases will be capped at 7% from April 1st 2023, this change also applies to shared ownership tenants. 

A detailed report of the October consultation can be found here. 

The new cap on rental increases for social housing tenants in 2023 should offer a sense of security and protection to tenants concerned about rental increases. 

Call for evidence on the impact of short-term lets

by Asif AliPosted on

The government has released a call for evidence to evaluate the impact of short-term lets on the housing market with the view to implement more effective regulations. 

Housing supply challenges are leading to mass shifts in quality of living – with young adults unable to leave their family homes, household overcrowding, unstable living circumstances and even an increase in homelessness.

How should this crisis be addressed? 

The most powerful way to address this crisis is to build more affordable homes across the country. The UK government has stated targets for this, but are falling behind on their plans to build new properties.  

Another factor in this crisis is unused homes, with an increasing number of properties being used primarily as a holiday home or other short-term let. Short-term lets are often criticised for having a big impact on the private rental sector, contributing to a significant lack of suitable housing for locals.

How big is the problem? 

  • Research from the BBC indicated that the total number of holiday lets across the country has risen by 40% since 2018.
  • Propertymark estimated in 2020 that 46,000 properties have already been made unavailable for local people looking for a home due to private landlords changing from long-term to short lets and one in 10 landlords would consider switching to short lets, under the current regulatory framework.

The correlation between increasing short-term lets and housing supply problems in the UK is hard to ignore. There is now pressure on the Government to take action to apply stronger controls to short-term lets to ensure a better balance between housing supply and the potential economic benefits from holiday makers. 

Government plans for 2023

The UK Government has released a call for evidence to develop a registration scheme in England for tourist accommodation with the aim of collecting data on the market to better understand the impact of short-term lets. 

The  review will look to address potential solutions for the key challenges caused by increasing short-term lets – particularly localised to areas where these issues are intensified by larger numbers of holiday makers. 

It will consider the growth of the short-term letting market, benefits of short-term lets and the potential impact of new policy suggestions. Additional consideration should be given to localised effects of the policies to account for the county variation in holiday let oversaturation.

It may be difficult for the UK government to balance the need to provide long-term homes with the economic benefits of holiday rentals, particularly considering the ever-growing need to boost the UK economy and move out of the cost of living crisis. 

We hope that the call to evidence will pave the way for balanced and data-driven initiatives which can benefit both the private rental sector and short-term letting agents.

Blackouts

by Asif AliPosted on

Blackout warnings have been issued by the National Grid, with planned nationwide blackouts expected to affect the UK in the coming winter months.

The Chief Executive of the National Grid, John Pettigrew, has warned that the blackouts are likely to take place during “very cold winter weekdays” between 4pm and 7pm and are a consequence of Russia’s war in Ukraine. 

How should Landlords respond? 

Unexpected blackouts could cause uncertainty and stress amongst tenants, particularly if they do not receive information on the length and frequency of the blackouts. However, when properly prepared, blackouts can be dealt with and both landlords and tenants can avoid major inconvenience. 

To make the circumstances as manageable as possible, landlords should take responsibility for properly informing their tenants of the expected upcoming blackouts, and provide useful information on how to prepare. 

Tips on how to prepare for the upcoming blackouts: 

  • Landlords should provide their tenants with updated information on the expected blackouts, including expected times and frequency (where possible).
  • Tenants should be advised to locate external batteries available for important devices (phones, laptops etc) ahead of the blackouts.
  • Tenants should keep a working torch in an easy to find location in their home.
  • Landlords should also consider the additional impact the blackouts may have on tenants who have young children, particularly around mealtimes. Reminding tenants that the expected blackouts may interfere with mealtimes will allow tenants to make alternative plans (such as pre-preparing non-cook meal options, or using a camping stove (for tenants who have a safe outdoor space).
  • To avoid panic, tenants can also be reassured that blackouts which only last for a few hours shouldn’t cause any major food safety issues for food kept inside the fridge or freezer. As long as the doors remain closed during the blackout, the fridge and freezer should remain at a cold enough temperature that the tenant’s food quality is not compromised.
  • Finally, due to the blackouts taking place during cold winter evenings, landlords can remind tenants to have alternative means of keeping warm available in the case that the temperature in their home drops significantly during the blackout. (Such as extra blankets and warm clothing). 

If tenants are well-informed of the upcoming blackouts and receive guidance on how to prepare, these planned blackouts shouldn’t cause any major inconveniences for either landlords or tenants. However, we advise following related news stories as more information is released in regards to the planned times and frequencies of these blackouts. 

Housing supply targets

by Asif AliPosted on

The UK is facing an urgent need for new and affordable housing across the country caused by an increasing population and lack of new builds. 

Housing supply issues have a significant effect on quality of living for renters, and potential renters, across the country. Lack of suitable housing can lead to: 

  • Overcrowding in houses as people work together to save costs 
  • Unstable living circumstances caused by increasing numbers of landlords selling up, or not being able to secure long-term rentals 
  • Increase in homelessness 
  • Impaired labour mobility 

According to research by the National Housing Federation, to minimise this crisis the UK must build an estimated 340,000 per year, with 145,000 fitting into the affordable housing category.

Additionally, it comes as no surprise that the supply challenges are creating a competitive housing landscape, raising prices and making it increasingly difficult for first time buyers to enter the market.  In August 2012, the average house price in England was £180,000, since then, house prices have increased by an astonishing 76%. 

As part of the Renters Reform white paper, the UK government pledged to build 300,000 new houses per year to work towards this goal.

Housing targets scrapped

Nearly 60 conservative rebels pledged to back-up plans to ban mandatory housing targets. Rishi Sunak has responded to this by easing measures and setting them as “advisory” instead of mandatory. 

In response to the surprising shift, Michael Gove stated “there is no truly objective way of calculating how many new homes are needed in an area” but the “plan-making process for housing has to start with a number”. 

Looking back to when Rishi became Prime Minister in October, there were already doubts surrounding these housing targets. In October (2022) statements, Rishi had claimed that he “did not believe in arbitrary, top-down numbers”. Whilst committed to building more suitable homes across the country the new Prime Minister doubted the achievability and accuracy of the targets.

The conservative rebels took issue with the effects the targets might have on specific constituencies, with concerns of over-building in more rural areas. The government has claimed that they will now consult on how the new guidelines can take local density into account. 

Whilst housing targets of 300,000 new homes per year will be advisory and not mandatory, the Government has stated their commitment to plan high numbers of new builds across the country. Additionally, new measures are being put in place to better control the short-term letting market in the hopes that this can create opportunities for higher numbers of suitable residential homes. 

The best property investment opportunities for next year

by Asif AliPosted on

As 2022 draws to a close, many landlords will be casting their eyes to 2023 and the rental opportunities that lie ahead for those seeking to expand their portfolios.

Despite ongoing economic challenges, property investment remains strong across the UK with rental demand and yields increasing across the country.

However, as the economic landscape changes, London is no longer taking centre-stage as a desired location for rental properties. Rising student demands and growing industry in northern cities is presenting new and exciting opportunities for landlords which might present more cost-efficient investments.

Where are the leading property investment opportunities in 2023?

1. Birmingham

As the largest professional hub outside of London, Birmingham presents an affordable opportunity for landlords wanting to expand their portfolios elsewhere.

The city benefits from a consistently high demand of both relocating professionals and students. This means buy-to-let landlords can find some exciting choices for investment in this city.

With 40% of the population in Birmingham being under 25, we can only expect demand for rentals in this city to continue growing over the coming years.

2. Bristol

In 2022, Bristol took top spot in Aldermore Bank’s buy-to-let city tracker, which ranks the UK’s best areas for buy-to-let investments. The research takes into account average rental prices, rental yield, short-term returns, long-term returns and percentage of the city population who are in the rental market.

Its top ranking was mainly due to long-term property growth; with an annual average growth of 5.1%, along with the lowest number of long-term property vacancies (0.6%).

This thriving city in the South West presents a research-backed solid investment that will likely appeal to landlords in the south looking to expand their property portfolios.

3. (any) Student Cities

As mentioned in our previous article, demand for student accommodation across the uk is at an all time high, presenting many investment opportunities for landlords who are interested in short-term student lets.

By nature student lets provide higher yields for landlords, due to charging rent per student. With the current demand crisis for student accommodation, now might be the right time to invest.

Landlord guide to avoiding winter mould damage

by Asif AliPosted on

During the colder winter months, the risk of property damage such as mould increases. Property mould is one of the most disputed types of property damage between tenants and landlords, with both building structure and tenant lifestyle contributing to these damages.

Property mould can cause structural issues, dry rot and leaks, which can all escalate into more significant damage. Additionally, the presence of mould can have a big impact on tenant health, with mould causing colds, allergies and worsening existing health issues such as asthma.

Can mould damage be prevented?

Both structural building issues and tenant lifestyle can contribute to property mould. We’ve put together some guidance below to help landlords better communicate with tenants during winter to prevent damage to properties.

1. Don’t let the property temperature drop too much

Rising energy prices are contributing to colder properties as tenants strive to save money. But unfortunately these cut-backs can cause mould build-up, which affects both tenants and landlords. Tenants should be properly informed of the ways they can be cost-efficient in their energy usage, whilst maintaining an acceptable temperature in the property.

Some preventative actions tenants can take include having the heating on for just one hour a day, making use of off-peak energy times to reduce costs, or maintaining a consistent minimum temperature in the household which can be more cost-efficient than an off-on approach.

2. Remove mould immediately

Early-stage mould is easily wiped away. Tenants should be encouraged to keep look-out for property mould and remove the mould immediately with mould remover spray to prevent spreading.

3. Ventilate when drying clothes inside the property

When tenants use drying racks inside properties to dry their laundry, they release large amounts of moisture into the air. Inside a cold apartment, this moisture builds up on walls and surfaces and can quickly turn into mould.

Tenants should be advised to always dry their clothes in a well-ventilated space (or preferably outdoors where possible). Having the heating on whilst clothes dry will speed up the drying process and reduce the risk of damp and mould.

4. Make sure ventilation is not covered

If property vents are covered by furniture, or extraction fans are not used in damp rooms, the restricted air flow will increase the likelihood of damp.

Tenants should be encouraged to open windows in bathrooms for a short period to avoid a build up of moisture and to avoid blocking air vents.

5. Reduce condensation when cooking

Boiling pans, frying and using ovens, can all contribute to additional condensation and moisture build-up. Tenants should be advised to keep windows open whilst cooking to increase ventilation and help to regulate the temperature. Where there are no windows in the kitchen, using the extraction hood when cooking will help to reduce condensation.

6. Avoid gutter blockages

At this time of year gutters can easily get clogged with falling leaves and debris from trees as well as moss from the roof. Overflowing gutters can damage walls and create damp issues inside the property. Landlords and tenants should ensure that gutters are cleaned before the worst of the winter months to avoid blockages.

Summary

It is important not to ignore mould, condensation and damp issues within a property. They often start off small but can grow quickly and cause lasting damage when ignored.

Many modern properties are so well insulated that it is difficult to stop condensation from building up so it is important that tenants are aware of the need to ventilate the property even when it is cold outside.

Be vigilant when carrying out property inspections and act quickly when tenants report damp, condensation or mould in the property and where necessary ensure repairs are made.