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Despite property investment being an overall profitable industry, private landlords are constantly confronted with a multitude of challenges; with high demand, void periods and the persistent issue of tenant arrears to name a few.
Compounding these challenges is the notable absence of social housing, which complicates the dynamics of the rental landscape even further. But how is the lack of social housing intensifying existing market pressures? Read on to find out more.
Tenant Arrears Amid Rising Rents:
Despite the increase in demand for rental properties, the issue of tenant arrears persists, particularly in regions where rising rents are outpacing the growth of wages. The widening gap between affording rent and household incomes places tenants under financial strain, increasing the risk of rent arrears. As a result, landlords are tasked with striking a balance between maintaining rental profitability and supporting tenants facing economic challenges.
Cost of living
It’s no surprise that the ever-growing cost of living crisis plays a significant part in the reason for tenants falling behind on rent payments. Landlords have spent the last year increasing rent, as a domino effect of monthly mortgage repayments increasing. With wages remaining the same, it’s no surprise that tenants are falling behind on their rent payments and prioritising other costs of living – but to the detriment of landlords who rely on them to pay their mortgage.
High Demand and Void Periods:
You wouldn't think that high demand for rental properties would prove to be an issue in today's market, but despite rent pressure escalating, there has been a slight increase in void periods. Goodlord reveals that void periods increased from 20 days in December 2023 to 22 days in January. However, this is still lower than the 23-day average recorded in January 2023. But with rents on the rise, could it be that voids are increasing due to lack of affordable rent?
The Absence of Social Housing
The lack of social housing presents further challenges for both landlord and tenants, with more and more tenants driven out of the private rental market and seeking more affordable accommodation. With limited options for subsidised rental housing, low-income individuals and families are left vulnerable to market forces, often forced to contend with unaffordable rents or substandard living conditions. Local authorities are under pressure to build more housing as tenants demand grows, but what is the solution in the meantime?
Guaranteed Rent: A Landlord Solution
The combination of high demand, increased void periods, tenant arrears, and the absence of social housing presents a tough challenge for landlords operating in the private rental market. By acknowledging the interconnected nature of these issues, landlords can contribute to supporting the housing crisis. The Elliot Leigh Guaranteed Rent scheme was designed to bring a hassle-free property management experience to landlords, and subsequently support the provision of social housing. Whilst we agree that more could be done from local authorities, we cannot ignore the fact that we have the resource to make a change. If you’d like to know more, get in touch today.