How to protect your rental income during difficult economic times
As a landlord, you may think that you will be ok. You have your salary, pension, or even savings. Because you are a landlord, you also have supplementary income from your tenanted property. You'll get by.
But you need to make sure that the rental income is safe! Here's how.
Avoiding doom and gloom headlines and negative news stories is almost impossible. Cost of living crisis and the war in Ukraine. The aftermath of Covid-19 and the substantial tax increases that we can all feel looming because the government had to support families and businesses throughout the lockdown period.
As a landlord, you may think that you will be ok. You have your salary, pension, or even savings. Because you are a landlord, you also have supplementary income from your tenanted property. You'll get by.
But, the people that pay that supplementary income, your tenants, are dealing with the cost of living crisis too, and they might not be in the same financial position as you are.
Your tenants need to find the money to pay all the same bills you do, but without the extra income, you have. When the economy struggles, tenants and homeowners alike are all in the same boat and feeling the pinch.
As a landlord, you may be starting to worry about your tenants being able to pay their rent. Or perhaps you're concerned about their job security or even your own job security. There are many factors, and each tenant, landlord and property are different, but if you or your tenant are starting to have concerns, now could be the perfect time to engage a managing agent.
Why?
A managing agent will be on hand to ensure that your tenants are safe in their job and that the rent will be paid. They'll be in regular contact with the tenant to deal with any potential issues as soon as, or perhaps even before they happen. A managing agent is your legal representative, your bailiff and your eyes and ears, all wrapped up in one. If you're worried and reliant on your tenancy income, the best way to ensure that you will continue to receive it is to protect it by employing a professional to look after it for you.
Yes, it will cost money.
But in reality, the cost and impact, not to mention stress, that would be caused if a problem arose would far outweigh the small percentage the letting agents charge to manage the property for you. They are professionals, qualified and experienced, and many of them have been in the industry through several boom and bust cycles already, so they're familiar with what can happen during unsettled economic times and how to handle it for the best.
Ultimately, as we move into uncertain times, we could see a rise in rent arrears as tenants struggle to decide which bills to pay. Having a letting agent could help to minimise this worry and risk. They will a) know the warning signs, b) have lots of other tenants that they manage - after all, the economy affects people across the board, so all tenants and landlords are in the same boat, and c) they will have a robust process for helping tenants and landlords through an economic crisis.
We don't know what the future holds, but it makes sense to be prepared rather than burying our heads in the sand. If a downturn is looming and inflation rises, now is the perfect time to build a team of professionals to help you manage your portfolio before it's too late.
Get in touch today to learn more about how our team can help you manage your rental properties.