Conversations surrounding tenancy renewals typically take place three months prior to the end of a rental contract. However, we are now seeing a growing number of tenants thinking about their renewals further in advance – in some cases up to 12 months ahead.
For many tenants their reason is simple: they want better value. They may have been renting the same property for three to five years, sometimes longer, but are becoming increasingly savvy to changing market conditions, a number of them even following the rate of rental price inflation. And in some areas, for every tenant searching for a home, there are around 10 to 15 suitable properties.
With tenants become more discerning and with more competition on the market, landlords must ensure they take steps to prevent good tenants from moving on.
Keep an open dialogue throughout the tenancy
The main reason tenants leave, aside from seeking better value, is because maintenance issues at their property are not dealt with efficiently. As a landlord you need to keep in touch, be approachable and act quickly when any problems arise. You might also consider instructing a property management company who can organize works on your behalf.
Be flexible on the rent
Lowering the rent in the short term may reap dividends in the long term. If a tenant presents an offer at the point of renewal, don’t be hasty when making a decision. It is important to be realistic as the market continually changes and even a small financial gesture can make all the difference, possibly even preventing a costly void period.
Put yourself in your tenants shoes
Educate yourself on your competition and think about what your tenants will be seeing when they are viewing elsewhere. Invest in good quality fixtures and fittings: it is obvious when a property has been fitted out cheaply and if a tenant is planning on renting long term they will expect a certain standard.
Listen to guidance and be open to feedback
Trust your agent to give you advice that puts you in the best position to rent your property. They will know the market and the tenants who are currently out looking. We recently agreed a renewal with no rent increase even though it had been pre-agreed at the beginning of the contract. Knowing that the property would face plenty of competition if it came back to the market, it was important that we managed our client’s expectations and gave the best advice.
Do your research
Savills Residential Research department regularly produces documents outlining current market conditions. For example, our recent research found that properties with six bedrooms or more saw a 4.1 per cent fall in rental values over the last year compared with one- and two-bedroom homes which saw a 2.1 per cent rise. Understanding the current rental climate in your area will help you make an informed choice during the renewals process.
