How is the Cost of Living Crisis Affecting Lettings?

The cost of living crisis is affecting most people in the UK and around the world right now and, unfortunately, it doesn’t look like it is going anywhere soon. Stagnant wages, tax increases, fuel costs going through the roof, food prices rising and other issues have occurred as a result of the knock-on effects of the war in Ukraine, coronavirus and Brexit, making life pretty miserable for many.

As with so many sectors, the lettings market is feeling the repercussions of the pressure on people’s pockets, and it is causing a number of consequences, some expected and some not. Here is a run down of how the cost of living crisis is affecting the lettings industry.

Tenants Struggling to Pay

As you would imagine when costs are high and wages remain at a level, you end up with tenants facing a shortfall of money every month.

There is an ongoing debate in Scotland relating to rent price caps, but some opposition MSPs at Holyrood are now pushing for it to take immediate effect, given the squeeze on people’s budgets. They say that tenants cannot wait for years for their monthly payments to be frozen and that the SNP and Greens in power should introduce rent control now as part of its Covid recovery legislation.

Across the country, there are similar issues with tenants not being able to afford their monthly payments. London landlords are lobbying the government to increase benefits for tenants who are now falling into arrears, and this comes as it was announced that 71% of UK landlords had at least one tenant in arrears during the Covid-19 pandemic.

More Demand for Energy Efficient Homes

Another outcome of the cost of living crisis was a lot less predictable. FJP investment found that people are much more interested in homes with a high energy efficiency rating than previously.

This is partially due to our ever-increasing consciousness of green issues, but also because energy prices have reached an all-time high and, the more energy efficient a home, the less you have to spend to keep it warm. Coupled with the increase in remote working, the cost of heating a property has never been more important.

Landlords with properties that feature new boilers, heat pumps, insulation and cavity wall insulation, for example, could find them in demand in the coming months.

A Rethink on All-Inclusive Rents?

Some industry leaders are suggesting that landlords abandon all-inclusive rents, for fear that increasing fuel costs will obliterate their profits or that they will have to levy a hefty increase on their tenants.

In a stable energy market, a landlord can make a reasonable guess at how much energy the tenant will use and how much that will cost before calculating an all-inclusive monthly price that means the landlord deals with the utilities. However, when prices surge and the energy price cap is set to rise by nearly 50% in the autumn, all-inclusive rents might become unsustainable.

Landlords might already need to push up their prices due to inflation, but those who lump energy bills in too will feel that pressure even more keenly. This will then lead to difficult conversations with tenants about why their rent is rising so much.

Need Help Through the Cost of Living Crisis?

If you need help with your rental business through the cost of living crisis, we can provide it. When prices rise, your offering has to be perfect so that tenants feel that they are gaining value for money. Our property management service super-serves your tenants with professional and effective maintenance, administration and technical skills. We free you up to concentrate on other pressing matters, ensuring that your rents are paid, tenancies run smoothly and properties are in great condition. Contact us today to find out how we help you.