2022 has been a difficult year for Landlords. With the abolishment of Section 21 on the horizon and the worse for wear economy, it can often leave you questioning whether your investment is a sound one.
We’ve written a small blog covering some of the 5 biggest challenges that Landlords face in 2022, so let’s get straight into it.
Increasing Interest Rates
With the announcement of the UK mini budget, mortgage interest rates have surged dramatically having a knock on effect on a large portion of Landlords within the private rented sector.
Landlord’s don’t just withdraw profits from their property portfolios.
Many use money earned from rental income to do things like refurbishing parts of their existing properties to improve the lives of their tenants.
The increase in interest rates forces many Landlords to fix into longer term mortgages, with 10 year fixed mortgages currently offering the cheapest rates in October 2022.
To compensate for slimmer profits, a lot of property investors are putting up rents to manage rising costs, making it less affordable for their tenants in the long term.
Over the past few years, I think it’s fair to say that Landlords have taken an absolute beating with the introduction of legislation that seemingly adds to the challenges landlords face.
With the removal of Section 24, a lot of Landlords were forced to incorporate in order to gain tax relief. This adds on to an extensive list of Legislative changes that have increased the amount of time & admin work that Landlords now have to proactively adhere to.
And that’s the tip of the iceberg. With the abolishment of the Section 21 notice on the horizon, many Landlords might find it extremely difficult to remove problem tenants from their properties.
It’s more important than ever before to be by the book and to ensure that you have a contingency plan in place for every tenant, as things like missing certificates, How to Rent guides & unprotected deposits can cost you thousands and thousands of pounds if you’re not careful.
That’s why as a Landlord, it’s crucial to make sure every communication effort or notice served is documented rigorously.
Sure, time spent doing admin increases, however, we promise you it’s entirely worth it, especially if any disputes with tenants surface.
Being a Landlord - Cost of Living & Energy Crisis
It’s a tough time for all, especially those who are actively letting our properties or renting one.
According to Shelter, 2.5 million renters are unable to pay their rent, an increase of 45% since April.
Scary statistics, to say the least.
With energy prices surging due to the ongoing war in Ukraine as well as the cost of living on the rise, people are going to struggle financially, and these struggles will end up being passed on to those that rely on rental income to maintain their property businesses.
Considering the effects it’s having on the Landlords who own the properties those tenants are currently living in, there’s no wonder a lot of them are considering selling up, no longer being a landlord and taking their cash elsewhere.
Hopefully, we don’t come to a head where demand will end up outstripping supply.
If this is the case, a lot of tenants will be forced to vacate the properties due to the Landlord putting the house on the market and there’ll be a serious shortage of rental properties available.
In Scotland, the first minister Nicola Sturgeon recently introduced emergency legislation that could stop you from evicting tenants during the winter and until March 2023, on top of not being able to increase the rental costs for properties located within Scotland.
This is in a bid to help tenants cope with the ongoing cost of living and energy crisis that landlords are apparently immune to…
In addition to this, the Scottish government has a clear line of sight to giving tenants additional powers that could help them challenge rent rises.
Fortunately for most, a rent freeze in England, Northern Ireland or Wales hasn’t been announced just yet. Let’s just hope it stays that way!
With not-for-profits like Shelter actively involving themselves in the private rented sector, it’s become particularly challenging for Landlords who try to do everything correctly.
Shelter, for example, aims to educate tenants on their rights and what they can do to combat things like rent increases or eviction efforts. Whilst we advocate for making tenants aware of their rights, there’s always going to be a small portion that choose to abuse them.
It’s a conjunction of challenges.
Going to court to remove a non-paying tenant can sometimes be a lengthy and drawn out process, especially if you’ve neglected to cover the fundamentals.
Making Sure You Get It Right
What we, Alphaletz, aim to do is educate Landlords on how to effectively follow up eviction proceedings with the courts on your side.
Fortunately, we continually develop fantastic features into our property management platform that can make the world of difference.
One thing we promote is our document storage facility as well as our free guides. We’ve got tonnes available like our:
- Checklist that can help you effectively screen tenants.
- Welcome Pack Template (we recommend this, as it covers all of the documentation you should be giving to your tenant at the beginning of a tenancy.)
- Inspection checklist & guide to help you stay on top of maintenance, repairs & compliance issues.
You can click on either of the above to download them for free!
Now, pair those up with a system where you can store documents against a particular property or tenant, and you’ve got a paper trail as long as your arm should a dispute go to court.
This is, of course, is a small part of our award winning landlord software that can save you up to 75% of your time.