The rental market used to have stand-out hotspots for higher prices, in large cities such as London, Birmingham or Manchester. However, as a result of the cost-of-living crisis, rents are rising across the country, reaching towns and cities such as Rotherham and Bolton, which have traditionally been cheaper options.
Part of this increase is due to landlords preparing for the upcoming cost of living crisis, anticipating what might become a reality and adjusting their rates accordingly.
This anticipation then has a knock-on effect within local rental markets, as landlords see the comparable prices their competitors are setting for their properties and adjust their own prices to match.
However, this increase may lead to unintended consequences. For many young people, long-term renting is not a goal, and if they are unable to save while they rent, particularly as their other bills begin to increase sharply, it may well lead to a reduction in demand for housing, particularly in areas where there are fewer job opportunities.
If rents continue to rise unsustainably, many under-30s will be priced out of the market and opt to remain in their family homes where possible, allowing them to continue to save towards a deposit.
However, there are simple ways that landlords can mitigate these issues and work with tenants to avoid them falling into arrears should rental prices increase.
Firstly, it is necessary for a landlord to look at their affairs and interrogate how flexible they can afford to be. Once they understand their own finances, they will be in a better position to know how much help they can offer to tenants. This could be directly, by arranging payment plans that account for months where tenants are unable to pay in full, or when an increase in rent is required, to achieve a rent that is sustainable to both parties.
The second vital approach that all landlords must take is to ensure that they vet all prospective tenants before they sign the contract. Utilise the application process to understand the financial position of your tenants as far as is reasonable, for example by asking for evidence of past bill payments and references from work or previous landlords to ensure that they are able to commit to the monthly rental payments.
Thirdly, it is imperative for landlords to maintain an honest and open dialogue with their tenants, to spot early warning signs that they may be struggling to keep up with payments as energy bill increases come into effect and the price of food and essentials continues to rise. By keeping channels of communication open, landlords will be able to protect themselves from losses, and maintain a good relationship with the tenants in their properties.
Finally, it is important for landlords to ensure that they are protecting themselves when agreeing to potential concessions for tenants who may need to enter into repayment plans as the crisis worsens. This can be done by committing all new agreements to writing, which will act as evidence in support of the landlord should they go wrong in the future.
Whilst the rental market is set to face an increase in challenges as the cost of living crisis affects both tenants and landlords, the methods to navigate through these problems are simple and available to all.
By keeping rent comparable, but not pushing the market too far forward, landlords can ensure their properties will continue to be filled.
By conducting stringent checks within the application process, landlords can mitigate against any future losses in rental payments, and by working with tenants in the spirit of honesty and open communication they can ensure that they are acting in a socially conscious and responsible manner as we move through the cost-of-living crisis together.
*Gary Ekpenyoung, partner, and Danielle Sodhi, housing specialist at law firm, Shakespeare Martineau *
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