As the UK’s economy experiences a slump and the house market prices continue to plummet, it is essential for landlords to know how to manage their letting properties and rental prices. We have just the quintessential advice on renting a property that renters should keep a list of for letting properties in 2023.
The cost of renting a property will continue to grow, according to a UK estate and rental company, which predicts that house prices are likely to stagnate in 2023 as a result of inflation and rising mortgage rates. Over the next four years, rental growth is forecast to outpace house price growth, reflecting the rapidly increasing high-cost environment that landlords have to face. Rent prices are anticipated to rise by a rate of 5% annually in 2023 and 2024 before dipping slightly to 4% in 2025.
Tips renters should follow in 2023
- Know how much rent to charge for the place
According to the recent private rental market statistics from the UK’s Office for National Statistics (ONS), which cover the years 2021/22, the average monthly rent in England was £795. This was the greatest number ever recorded, according to the ONS. Moreover, it stated that the North East had the lowest median monthly rent (£505) while London had the highest (£1,450). Thus, renters need to thoroughly research their region first in order to charge reasonable rental prices. It should be understood that with a considerable hike in rental prices, tenants must be convinced of why the place is worth the price, and that is possible only if renters have vast knowledge about the pros and cons of the area.
Make the lease informative
Rent review information should be included in the lease so that it is more facile to have negotiations with the tenant about it and receive their approval politely. Including recent listings for comparable properties in the area to demonstrate the market rent can be a fruitful step. The agreed-upon amount should be confirmed by giving the tenants at least eight weeks’ written notice, along with a text to remind them shortly before initiating the first new bank payment.
- Keep track of the Retail Price Index (RPI) average rate
Examine the RPI average rate for over a year so that you can use this as the base for increasing prices. Renters should consider changes in the rental cost, such as those of gas supply, electricity and water supply, to come to a conclusion for a final rate. Make sure to consider the mortgage rate increases, as these are the driving factors in today’s housing market.
- Know how much and when to increase the rent
Increasing the rent annually is an effective measure because failing to do so will force renters to make larger rental increases later, resulting in a significant rise rather than incremental yearly increases. If you raise the rent by £25 to £30 a month, tenants won’t leave a decent rental, but if you raise it by £100 after three to four years of no change, they surely will as the hike is sudden and too much.
- Establish a good relationship with your tenants
Try to establish a good rapport with your tenants. If you can and don’t require middlemen, dealing directly with the tenants can be very impactful, especially if you want to increase rents due to unavoidable reasons, such as the current inflation. Prior to posting a new rental ad and each time a tenant vacates, examine the rent. Rents should be raised to market rates at this time. If it does become essential to raise a long-term tenant’s rent, it is crucial that the increase be acceptable and, ideally, at most 5%.
- Know the driving factors
Mortgage rate changes, insurance premiums, and maintenance expenditures are all driving factors. A balance needs to exist; thus, you can review rents every two years and show the tenants the average rent increase in the particular region using authentic, published data. Renters can then offer a value of half to two-thirds of that percentage. This measure will ensure that you can gradually increase the return on your property investments during the tenancy and avoid “void” periods.
- Look out for off-plan property
The process of purchasing a property (usually apartment complexes and units) before it is completed is known as off-plan property investment. Purchasing off-plan entails paying a reservation fee and deposit either before or during construction, with the goal of enabling the asset to appreciate in value once the development phase is complete. With the tenancy demands on rise and housing prices on a decline, off-plan properties are the most lucrative options for renters wanting to buy-to-let.
It’s only rational to consider your property, market, and tenants impartially when making the decision of letting a property. A change may not be the worst thing that can happen if you are in a market with high demand, the property needs renovating, or your tenants have sometimes been flawed. Keeping up with the current market, mortgage rates, new tax laws, and demand and prices is the priority; you need an experienced advisor for that.