With the cost of living crisis in the UK really starting to bite, tenants are likely to find it more difficult to meet their rental payments. This means it’s essential for landlords to take steps to protect landlord income and property costs during these tough times.
Tenant affordability checks during the cost of living crisis UK
The first thing to make sure is the tenant you have already or are about to take on can afford the property in the first place. One of the best ways to do this is to instruct a qualified letting agent such as Gibbs Gillespie as they will be used to checking out tenants to make sure they have the income needed to cover the rent.
Another thing to think about if we are heading into a recession, is that there are some jobs that are less likely to be lost or impacted, such as working in food retailing or essential services such as nursing or the police. So think about and discuss with your letting agent how ‘safe’ the tenant’s income is now and in the future.
Keep your property in great condition to protect your landlord income
Next, you ideally want to be paid top notch for your property, so you can secure the best rental income and reduce any void periods when the property isn’t let. The way to do this is to make sure your property is in great condition and really appeals to local tenants. Working with an expert agent that knows the area really well and understands which properties go for £25 or £50 more a month than others can help cover any additional costs of using an agent and ensure you maximise your rent.
No deposit option
If you haven’t already, it is also worth comparing taking a deposit versus offering tenants a ‘no deposit’ option. This can help you access more tenants, some of whom may have the income to support the rent, but not necessarily the savings to pay for a deposit upfront. From a landlord perspective, with our scheme, you will also be indemnified by Gibbs Gillespie for the equivalent of 7 weeks’ rent, whereas if you take a standard deposit, that’s capped at 5 weeks.
Regular rent reviews
It’s key to make sure you regularly review rents to maximise your investment without overstretching your tenant’s affordability. Some landlords choose not to increase their rents for existing tenants, even if they stay for some years. Oddly, this can actually cause problems for both the tenant and the landlord which we detailed in a previous article. If we help manage your property, we will advise on this for you.
Reduce risk with landlord insurance
In addition, there are various ways you can protect your landlord income and your property if things go wrong. You can purchase rental insurance which can be extremely cost effective if the worst happens. Our insurance partner Bode, can help cover any problems such as:
- Theft, fire and flood
- Damage to the property caused by tenants, including contents
- Contingency cover for tenants’ non-disclosure
Remember, it’s not just food and energy bills that are rising with the cost of living crisis in the UK, the cost of repairs to properties have also gone up and it maybe a shock if you have to pay out unexpectedly, so do compare and consider latest quotes.
Premier Service at Gibbs Gillespie
Another service to consider from Gibbs Gillespie is the Premier Service which ensures your tenant is less likely to have financial difficulties, but also to help carry out a lot of the work if they do default so you won’t have to worry. This service includes a more in-depth interview with prospective tenants and reimbursement of rent if the tenant hasn’t paid within 30 days of it falling due. We can also help with finding accommodation if your tenant hasn’t moved out of your home when you want to move back in. You do need to already be using our rent collection or full management service to take advantage of this, however it costs just 3.5% + VAT extra (4.2% inclusive of VAT) of your monthly rental income.
Richard O’Neill, Managing Director for Lettings (Central), says: “This is a valuable product, giving many of our landlords, including myself, peace of mind that should the tenant come into financial difficulties, we are able to claim reimbursements of the rent.”
Expert tax advice
Finally, it’s always important to check you are paying the minimum amount of tax you need. Property tax is complicated and isn’t separate to your other earnings, so do seek expert property tax advice this year to make sure you have reduced your tax bill by all the costs you can.
If you want advice on protecting your landlord income in these uncertain times, do get in touch with your local Gibbs Gillespie branch.
