Breaking Property News – 07/02/24
Daily bite-sized proptech and property news in partnership with Proptech-X.
InventoryBase – a Landlords guide to better tenant retention
In the ever-evolving property landscape, one fundamental truth remains – tenant retention is the cornerstone of any successful property business. Landlords who can recognise the value inherent in keeping their tenants content and committed for the long term will undoubtedly enjoy a much more profitable and sustainable property business.
Tenant retention isn’t just about maintaining occupancy rates, it’s about fostering an environment where both landlords and tenants thrive, and there are many compelling reasons why tenant retention should be at the forefront of every landlord’s strategy.
As seasoned landlords and property managers will attest, the benefits of tenant retention extend far beyond avoiding the hassles that come with vacancy turnover. Whether it’s to boost financial stability, reduce operational costs or foster a more harmonious living environment, we’ll explore 15 ideas for landlords to boost tenant retention in 2024.
Why is tenant retention important? Happy tenants equal a happy landlord. Tenant retention can save landlords money and is easier than having to regularly find suitable new people to occupy a property for rent. Tenant retention also delivers a steady, more predictable flow of income while at the same time reducing the myriad expenses associated with vacancies, screening new tenants, and marketing a property.
As the costs associated with letting out even one property are often considerable, securing a reliable tenancy becomes a landlord’s strongest asset when they own multiple residences. A vacant property ultimately means that the landlord is losing out on rental income. With mortgage responsibilities to meet, it can soon feel like a nightmare to have a property unoccupied. Tenant retention is also vital for financial peace of mind and business viability, bypassing negative consequences like missed payments and fees.
Additionally, besides the potential security risks of having an unoccupied rental property, this can allow maintenance issues to develop. Where no tenants are living in a property, the general condition of the property can deteriorate quickly, causing damage and incurred costs further down the line.
How to calculate tenant retention rates To improve your tenant retention rate in the future, it is vital to establish a baseline and understand your current tenant retention rate. As with any retention approach in business, finding a new tenant could cost you five times more than if you can keep your current tenant(s) in situ. Knowing this rate is a helpful piece of insight for your business.
You can calculate this user rate in four simple steps: Begin by recording how many tenants you had at the start of the year or any given month (e.g. 10 tenants). Add up how many tenants you have after a year/month has passed (e.g. 8 tenants). Divide the latter figure by the first (e.g. 8 divided by 10). This sum gives a figure of 0.8 which you then need to times by 100 to give you your tenant retention rate as a percentage. For our example, a landlord would have a tenant retention rate of 80% if they had 10 tenants at the start and 8 after the calculated period.
How to boost tenant retention Whilst some change is expected when renting out a property, increasing tenant satisfaction can boost tenant retention. While not all of these points will be applicable in every scenario, try to consider implementing as many of the following measures within your tenant retention plan.
1. Allow tenants to personalise their rental home Home is where the heart is, so letting your tenants decorate, put up pictures and personalise their space can help them feel settled, staying for longer. For example, 19% of tenants want to repaint the colours of a room, but feel that they’re unable to make slight changes to make it their own without having to constantly request permission.
2. Let your tenants keep pets As a nation of animal lovers, many renters will immediately discount a property if it states no pets. Responsible young families may also decide to move out when they decide it’s time to introduce a dog or cat. We recently discussed a Confused.com survey which found that tenants with pets pay more than others, so it can be a massive draw.
3. Maintain clear communication with your tenants Everyone should know what’s expected from both themselves and the other party when signing the tenancy agreement. Offering consistent and clear communication through email, text or phone calls will preserve good relations and ensure issues are reported promptly during the lease and between periodic inspections.
4. Be flexible and understanding It’s not unheard of for tenants to contact their landlord at unsociable times or on weekends. This is part of running a property business. Likewise, flexible landlords who waive late payment fees when a genuine change in the tenant’s circumstances has occurred will see fewer tenancy changeovers.
5. Ensure the rent is a fair price A property that maintains rental costs is more likely to help improve your tenant retention rate. Tenants will appreciate that the current economic climate could lead to mortgage increases but will feel more valued if any rent increases are fair and few.
6. Introduce incentives for lease renewals Given the expense and disruption of finding new tenants, it is usually preferable to keep the same tenants for longer. Encourage them to stay for longer in your property with discounted rent or permission to keep pets or decorate.
7. Conduct thorough tenant checks beforehand When searching for new tenants it is always wise to check their address history or ask how long they intend to stay in your property. Some will only want to live there temporarily, which will lower your tenant retention rate. Others will be seeking a home for the foreseeable future.
8. Build a strong landlord-tenant relationship No one living in a rented property wants to feel treated like a customer rather than a valued tenant. Small gestures such as remembering their names, greeting them with a smile, and checking in by email are three strategies to help achieve this foundation according to Parcel Pending. A happier more content tenant is likely to remain with you for more time.
9. Boost the EPC rating of the property Although this will require financial investment, making energy-efficient improvements can have two benefits. This will not only increase the value of your property but make it more attractive to high-quality tenants in the long term, given the comfort and financial savings they’ll experience. A higher EPC rating can be achieved by installing a more energy-efficient boiler, double glazing, programmable thermostat, and LED light bulbs, as we explored in our article New Landlords: 8 Tips for Success.
10. Request tenant feedback Part of growing your property business starts with gauging your performance in the minds of tenants. Sending easy-to-complete tenant surveys shows that you care about their opinion and can give valuable insights into how your business could be run better (and avoid tenant churn).
11. Take their feedback onboard Houst advises that “Taking tenant feedback seriously demonstrates that you value their opinions and concerns, fostering a sense of trust and respect”. For example, maybe the tenant was unaware that the fire alarm test was scheduled first thing every Saturday morning. Knowing this will allow you to apologise and repair a favourable relationship with the tenants who will be less likely to look elsewhere after the tenancy term ends.
12. Stay on top of vital maintenance You can boost tenant retention by being a timely and responsible landlord. Always ensure that you schedule essential maintenance and repairs whenever they are due or reported. Liaise with trusted tradespeople and gas safety engineers to preserve your investment. You don’t want to become known as a landlord who is always late with maintenance or arranges substandard, temporary fixes.
13. Do your research Another way of enticing your tenants to renew their tenancy lease is identifying what their needs are before they move in. Researching the local market will help you predict renters’ requirements and attract premium tenants who are searching for the facilities that your property offers.
14. Stay ahead of the times When was the last time you compared your property to the competition? The truth is that tenants are unlikely to stay somewhere that lacks modern amenities. By introducing the facilities and clean modern decoration that renters expect today, your tenants will feel less inclined to relocate.
15. Digitise your inspections Regular inspections help both parties by showing that the tenants are looking after your property. However, by digitising these inspections you can both receive a copy of the results. Tenants who are kept in the loop will feel more secure in their homes and may not look elsewhere, as we covered in 7 reasons why you should digitise your inspections.
‘Paradigm shift’ as OnTheMarket continues to acquire new agency clients?
The CoStar Group made it their avowed intention to become the number one property portal in the UK and whilst the signing up of a fifteen branch agency Edward Mellor is not a seismic change in the landscape, could it be the start of a rout for Zoopla. For many years there has been a duopoly in the UK property portal space with under financed OTM having much less than 10% of the marketplace. But now it would seem that the pendulum is perhaps swinging in a different direction and the c-suite of Zoopla must now start a plan to build a moat around their operations.
Studied in isolation a medium sized affair signing up to OTM and coming away from Zoopla may seem a small matter, but the event coming so quickly after the LRG (Leaders Romans Group) also exiting Zoopla is a very big deal. In a real ironic twist, agency players may well be going down a two portal route, but this time with a £30 billion capitalised business owning OTM the future may well see a very different pecking order by the start of 2025.
For the CEO of Edward Mellor estate agents, Colin Mellor, it appears to be a no-brainer to switch their allegiances, ‘it is now clear that with CoStar’s substantial financial reserves their recent acquisition creates the opportunity for a paradigm shift in the marketing of properties, both for consumers and agents alike. We envisage the OnTheMarket Brand now becoming a major influencer in the portal market and we look forward to seeing how our relationship develops.”
Jason Tebb, who is now President of OnTheMarket, signalling the American influence, made comment that it was ‘an incredibly exciting time for our agents, with the acquisition by CoStar Group accelerating our target of becoming the market leader, bringing industry-leading global expertise and significant financial firepower’ further adding that he was delighted ‘Edward Mellor has chosen to commit to OnTheMarket as part of its two-portal strategy. The addition of such a strong regional brand further strengthens our presence in the North West as we continue our push for growth across the country.’
Andrew Stanton Executive Editor – moving property and proptech forward. PropTech-X
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