How to keep a tenant? It’s a question that has taxed many a landlord.
Our own research has indicated that tenant trends are changing. It’s becoming increasingly unusual for tenants to stay in long-term rental situations and that’s something which might be a challenge for some landlords.
Typically, a landlord wants stability and predictability of income stream. If the advantages of the second point are obvious, the first is important too because changing tenants involves risk, admin costs and disruption to the business-as-usual workflows.
So, your business management processes may need to include a strategy for tenant retention.
Why tenants change
The research mentioned above yields a number of perhaps unsurprising factors that are prompting tenants to change more frequently. Chief amongst those are:
- rent increases (23%);
- difficulties with landlords (12%).
The question is, what can landlords do in order to keep tenants?
Here are a few points worth considering:
- look carefully at your rent increase plans. Will your new price still be competitive when measured against similar properties in the area? If it isn’t, your tenants may simply walk away;
- perform a cost-justification exercise before raising rents. For example, just how much will it cost you in time and effort to replace tenants who might leave following your increase? It’s important to understand the maths and be sure that your increase makes sense when measured against the risks you might be taking of losing your tenants as a result;
- if a rent increase is unavoidable, try to link it to something beneficial they haven’t had previously – in other words, convince them that they’re getting something in return. Notification of a rent increase which is also accompanied by confirmation that (e.g.) you’re installing some new garden furniture might result in a diluted focus on the increase itself;
- consider allowing your tenants a little more freedom to customise the property to their tastes. This is a growing trend and might help them to think of your property as home. Be sure though that your communications and demarcations are clear if disputes arising from misunderstandings are to be avoided;
- meet your tenants regularly for a simple relationship-type chat. This can help personalise you (or your appointed property agent) as an individual and nip any minor grumbles in the bud before they become a problem. Some tenants may never see their landlord from one month to the next and that might not always be a good thing;
- acknowledge any tenant communications promptly. This makes them feel valued;
- if you’ve received a request for action (e.g. a repair) but it’s one you can’t deal with immediately, tell them why not but say that it has been noted for attention. If possible, offer them a target date for resolution;
- make regular spontaneous improvements to the property. Even little things such the addition of external hanging baskets in summer can make a huge difference to the morale of tenants and their perception of you as a landlord;
- should a complaint arise, try to manage it down calmly rather than escalate tensions upwards through rebukes etc. Not all tenant complaints will be justified but they do indicate that the originator isn’t happy and that’s something that should influence your response if you wish to retain them;
- speak to your tenants in person or on the phone rather than use emails, texts, social media and letters. True, there may be times when, for legal reasons, you have no choice but to go into writing but the written word can be subject to misunderstanding and ambiguity and that can quickly sour a relationship.
Of course, with landlords under extreme financial pressure with the recent changes to mortgage tax relief, agents’ fees and legislation that impinge on profits, the only way you may be able to make your business viable is by rental increases.
The few basic points, however, might prove useful in helping retain your tenants.