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Securing good tenants 'more important than short-term rent gains'

24th May 2012

It is better for landlords to keep hold of good tenants than to sacrifice them for a possible short-term hike in rent, a lettings expert has claimed.

Earlier this week, figures released by LSL Property Services revealed that rents rose by 0.5 per cent on a monthly basis in April as rental demand continued to increase, with annual rental inflation standing at 2.4 per cent.

However, James Davis, chief executive officer at Upad, warned against landlords being tempted to significantly increase rents on the basis of figures such as these.

"It is all very well to read in the paper that rents have gone up, but a landlord shouldn't put their rents up by ten per cent just because that is what was in the papers at the weekend," he commented.

"They need to understand their marketplace and they may be better off taking a lower rent from a family that will rent for a longer period of time or has a better credit rating rather than trying to maximise their rent."

A trustworthy tenant may be more likely to look after the property - minimising the chances of the owner having to make a landlord contents insurance claim - as well as pay rent on time.

"Securing good professional tenants with excellent references is far more favourable than maximising rents in the short-term," added Mr Davis.

Significantly increasing rents could also lead to a growing number of tenants falling into arrears, meaning landlords need to balance bigger profits with what their tenants are able to afford.

Indeed, the LSL figures revealed that tenant arrears reached their highest level since January last month, with 9.9 per cent of all rent late or unpaid.

Commenting on the news, Stuart Law, chief executive at property investment consultancy Assetz, noted that arrears rates will vary from region to region, with low-quality properties in poorer areas more likely to have a higher arrears rate.

"Those poor quality areas with very cheap property are cheap because people are finding it hard to get mortgages because they are not [seen as] good, creditworthy borrowers for banks. In the same way, they are not good tenants for landlords," he said.

Posted by Brandon Parker

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