The rising cost of living is already altering tenant and landlord behaviour, as Ben Tyers, Business Development Manager at Vouch, explains.
The pandemic pushed tenants and landlords to adapt their behaviour, causing an uptick in payment plans being agreed, an initial dip in tenant movement, and a rise in the popularity of larger properties outside cities. Once the pandemic started to recede, tenant movement picked up pace again, and rents started to grow as demand returned to normal levels. So, what new lettings trends might the cost of living crisis bring about?
Landlords are moving away from all-inclusive rents
At Vouch, we've seen that many landlords have stopped including energy bills in their rent - this won't come as a surprise in light of fast growing costs. If they continued to include bills, they'd need to increase their rent by a significant amount.
Although landlords will likely decrease their rents when they stop paying the bills, tenants are therefore having to shoulder the burden of the increased energy costs themselves. Some reports are showing that co-living properties, which still tend to offer bill-inclusive contracts, are growing in popularity, in line with these changes.
Despite a higher monthly cost to incorporate all the benefits - some co-living properties even have an onsite cinema and gym, with membership included in the monthly rate - having a cap on household costs could prove attractive for tenants. It will be interesting to see the evolution of this sector of the market.
Tenants are becoming more apprehensive about moving
As rents and other costs are going up, at Vouch we're seeing that tenants already in rented properties are more apprehensive about moving.
They're more willing to let their fixed-term contracts roll onto a periodic tenancy, rather than looking for a new property. This is primarily due to the extra costs involved in moving, from renting a van to waiting for the security deposit to be returned.
It may also be influenced by tenants not wishing to commit to a 12-month tenancy on a new home while costs are fluctuating. It's better to stick with what you know than move to a new location and property while there's a lot of ambiguity in the market. They're willing to sit and wait for a little while, to give it all a chance to settle down.
This also benefits landlords. Tenants choosing to stay means no void period with the associated loss of income for landlords - or at least a delay on having to find a new tenant while costs are a burden on all parties.
Tenants may start downsizing - or moving back closer to work
On the other hand, if rents continue to increase at the current rate, tenants may reverse course on lockdown trends - garden, more space, a separate study - and choose to downsize. A smaller space will require less energy to heat, and normally cost less in rent too.
Alternatively, as hybrid working takes hold requiring employees to head back to the office for a few days a week, tenants that chose to move to commuter towns during lockdown may find their travel costs rising more quickly than budgeted.
They'll then have to calculate whether they'd be better off paying non-city rents or living closer to work again and perhaps cycling to the office to save on petrol too.
The choices tenants make will depend on how long-lasting these cost of living price increases are. As a proud Yorkshireman, I like to have a good moan about rising costs, and it looks like I may get the chance to participate in my favourite hobby for a while. The longer costs continue growing, the more pronounced any new trends in movement and tenant preferences will become.
Goodlord and Vouch are part of the Goodlord Group. Goodlord also offers a referencing service to complement its lettings software for agents.
