7 ways landlord income can be protected during the cost of living crisis

31st October 2022

With the cost of living crisis in the UK really starting to bite, contract-holders are likely to find it more difficult to meet their rental payments. This means it’s essential for landlords to take steps to protect landlord income and dwelling costs during these tough times.

Contract-holder affordability checks during the cost of living crisis UK

The first thing to make sure is the contract-holder you have already or are about to take on can afford the dwelling in the first place. One of the best ways to do this is to instruct a qualified letting agent such as us as they will be used to checking out contract-holders to make sure they have the income needed to cover the rent.

Another thing to think about if we are heading into a recession, is that there are some jobs that are less likely to be lost or impacted, such as working in food retailing or essential services such as nursing or the police. So think about and discuss with your letting agent how ‘safe’ the contract-holder’s income is now and in the future.

Keep your dwelling in great condition to protect your landlord income

Next, you ideally want to be paid top notch for your dwelling, so you can secure the best rental income and reduce any void periods when the dwelling isn’t let. The way to do this is to make sure your dwelling is in great condition and really appeals to local contract-holders. Working with an expert agent that knows the area really well and understands which properties go for £25 or £50 more a month than others can help cover any additional costs of using an agent and ensure you maximise your rent. 

No deposit option

If you haven’t already, it is also worth comparing taking a deposit versus offering contract-holders a ‘no deposit’ option. This can help you access more contract-holders, some of whom may have the income to support the rent, but not necessarily the savings to pay for a deposit upfront. From a landlord perspective, with our scheme, you will also be indemnified by us for the equivalent of 7 weeks’ rent, whereas if you take a standard deposit, that’s capped at 5 weeks.

Regular rent reviews

It’s key to make sure you regular review rents to maximise your investment without overstretching your contract-holder’s affordability. Some landlords choose not to increase their rents for existing contract-holders, even if they stay for some years. Oddly, this can actually cause problems for both the contract-holder and the landlord. If we help manage your dwelling, we will advise on this for you.

Reduce risk with landlord insurance

In addition, there are various ways you can protect your landlord income and your dwelling if things go wrong. You can purchase rental insurance which can be extremely cost effective if the worst happens. Our insurance partner Bode, can help cover any problems such as:

  • Theft, fire and flood
  • Damage to the dwelling caused by contract-holders, including contents
  • Contingency cover for contract-holders’ non-disclosure

Remember, it’s not just food and energy bills that are rising with the cost of living crisis in the UK, the cost of repairs to properties have also gone up and it maybe a shock if you have to pay out unexpectedly, so do compare and consider latest quotes.

Premier Service 

Another service to consider from us is the Premier Service which ensures your contract-holder is less likely to have financial difficulties, but also to help carry out a lot of the work if they do default so you won’t have to worry. This service includes a more in-depth interview with prospective contract-holders and reimbursement of rent if the contract-holder hasn’t paid within 30 days of it falling due. We can also help with finding accommodation if your contract-holder hasn’t moved out of your home when you want to move back in. You do need to already be using our rent collection or full management service to take advantage of this, however it costs just 3.5% + VAT extra (4.2% inclusive of VAT) of your monthly rental income.

Richard O’Neill, Managing Director for Lettings (Central), says: “This is a valuable product, giving many of our landlords, including myself, peace of mind that should the contract-holder come into financial difficulties, we are able to claim reimbursements of the rent.”

Expert tax advice

Finally, it’s always important to check you are paying the minimum amount of tax you need. Property tax is complicated and isn’t separate to your other earnings, so do seek expert property tax advice this year to make sure you have reduced your tax bill by all the costs you can.

If you want advice on protecting your landlord income in these uncertain times, do get in touch with your local branch.

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