Premium rents require a premium service
Rents in Britain rose by 6.2pc in 2023 to record levels, but some of the heat has come out of the rental market since the start of this year and we’re seeing more normal conditions return.
To achieve the highest prices, landlords are having to be much more mindful of tenant experience – responding quickly, carrying out immediate repairs and providing an exceptional level of service.
Expectations are much higher post-Covid. Many tenants have had to stretch themselves to afford higher rents. And now so many work from home at least a couple of days a week, a noisy dishwasher they were previously unaware of might now be disrupting work video calls from home and therefore they’ll want it to be fixed, which is an additional expense.
At the same time, contractors are busier than ever, and with supply chain delays on many appliance parts, managing tenant expectations with repairs is crucial to maintain good relations.
Add to this the increasing responsibility of landlord legislation and compliance, and we’re seeing more and more landlords turn to professional property managers to manage their properties for them.
Higher service levels go both ways, though. A recent survey of our own landlords showed that tenant quality is their highest priority, followed closely in second place by the need for maximum rental yield.
In nearly all cases they would rather secure a considerate, reliable long-term tenant, even if they need to accept a slightly lower rental yield or a brief void period in return.
Capital growth isn’t a given
The timely disposal of rental properties is a recurring conversation with our landlords, but many are finding that a weak sales market means they haven’t achieved the capital growth they were hoping for.
In the case of prime central London, prices still remain below 2014 levels, meaning anyone who bought in the last decade may face selling at loss. It’s a bitter pill to swallow.
On a recent property tour with an apartment buyer with a budget of £2m-£3m, we viewed 10 properties across central London. In eight of those cases, the owners were prepared to accept the same price they had paid for the property – or less.
Those with large mortgages who are coming under serious cost pressure are more inclined to cut their losses and sell, while those who own their property outright, or with a relatively small mortgage, are more likely to sit tight and wait for the sales market to improve.
