The cost-of-living crisis has caused added pressure for both landlords and tenants. Landlords are experiencing mortgage and bill increases. Whereas tenants are struggling with rent payments due to the increased living costs across the country.
Mortgage Rates Increasing
As mortgage rates have increased – landlords are forced to incur these additional costs out of their own pocket. In some cases, landlords may increase the rent so that the tenant pays the difference. But, in other cases, landlords may avoid increasing the rent where the tenant is unlikely to be able to pay the extra costs. But they may pursue possession of the property to seek new tenants who can pay increased rent. However, it is advisable before seeking possession to speak to the tenants to get an understanding in respect to their finances. Then you can see if they can pay any increased rent.
Landlords who offer their tenants fixed bills/all-inclusive tenancies are likely under further stress due to the rise of energy and gas prices. Landlords can try to combat this problem by setting a cap on the usage, so that tenants will be liable to pay any extra energy and/or gas that exceed the cap. Another option is to try to agree a new tenancy agreement with the tenants which does not includes bills, but all-inclusive tenancies are arguably more attractive to prospective tenants due to the rising bill prices and current uncertainty in the market.
Landlords having to keep up with EPC Regulations
In addition to increased bills and mortgage rates – landlords also need to consider the EPC rating of their rent properties. By 1 April 2023, rented properties must have a minimum EPC rating of an E or above. However, the government have proposed the following changes: all newly rented properties must have a minimum EPC rating of a C from 2025 and then all existing tenancies must follow suit by 2028. These changes will also cause further financial pressure on the landlord to spend money on improving their rented properties or potentially face a penalty if the minimum standard has not been met.
What can landlords do for extra security?
For increased security landlords can ask for a guarantor to be on the agreement, which isn’t common for anyone other than students who are renting. At this moment in time, it isn’t necessary to ask for a guarantor but if a landlord wants less risk it can be an option.
Being a landlord in today’s market can be difficult and daunting. With the ‘cost of living’ crisis, landlords are facing increased mortgage rates, rising energy bills for all-inclusive tenancies and EPC rating improvements that need to be made by certain deadlines. However, it’s important that as landlords we remember our responsibility towards our tenants during this time so they don’t suffer due to circumstances beyond their control. By following these principles, both parties will benefit from an improved tenant-landlord relationship which is beneficial for everyone involved.
Contact Woodstock Legal Services for advice on how to deal with and manage your properties and communicate with tenants during this time.