Why short-term gain can lead to long-term pain for landlords

Why short-term gain can lead to long-term pain for landlords

We read an article recently which featured a letting agency encouraging its landlords to avoid rent increases and instead focus on keeping tenants over the long term. 

Apparently, this is down to an over-supply of property to let and political and financial uncertainty stretching into the future.

Not withstanding the current political turmoil, it’s something we’ve been saying for years.

When a landlord takes a short term view to their property investment it can often spell trouble.

Without getting too deep, a lot depends on your letting agent’s philosophy to the property business.

Some agents especially in the past (the quite recent past) said things like: ‘The rental market is so strong at the moment; we can get you even more rent. So come on let's squeeze those tenants for every penny."

But for us that philosophy is somewhat counterintuitive. We maintain the approach of finding and keeping good tenants for the landlords we work with.

If you hike up a person’s rent whenever possible it may mean more money in the short run but can be more costly in the long run.

Our advice to clients and indeed anyone thinking of investing in rental property is this:

Getting higher monthly rents isn’t as important in the mid to long term as finding and looking after good quality tenants who are a paying a fair rate.

In our 49 years experience in the industry here are just some of the benefits a good quality tenant brings:

- A lower tenant 'churn-rate' and therefore less expensive void periods

- Fewer unnecessary repair or maintenance call outs meaning a reduction in the property’s running costs

- Good tenants appreciate they are being treated fairly and respectfully and they look after the property accordingly

- Not to be underestimated is that when you have a good tenant in your property you reduce your stress levels

 

Going for the biggest monthly rent charge is, and always has been in our opinion, a mistake. Obviously we are not suggesting that rents should be well below the market average, but we think that a fair and acceptable rent is better for all concerned. 

Taking the time to find, vet and keep good quality tenants is the best way forward in the long term.

Thanks for reading and if you have any other property related questions please don’t hesitate to get in touch with us – we’d love to help you.

 

Alex Britchfield | Partner | Davies & Partners 

01280 702867