Tenant care matters in cost of living squeeze - David Alexander
The result was that many tenants who had either reduced hours forced upon them or lost their jobs entirely were offered reduced rents, delayed rent and, in some cases, totally rent-free periods which were not expected to be paid back.
Of course, with demand for accommodation having virtually collapsed, some landlords felt they had little or no alternative but to offer deals because at the start of the pandemic no replacement could be found for an evicted tenant and, later, it actually became illegal to carry out an eviction for any non-payment of rent that was covid-related.
However, in dealing personally with scores of landlords, it also became clear to me that many were prepared to offer rental concessions simply because they were genuinely distressed by their tenants’ predicaments and believed they were morally obliged to help.
Happily, the sector has moved on from this situation with demand now exceeding supply at a higher level than before the pandemic struck in March 2020.
But, as we say in Scotland, “there’s aye something” and that new something is the huge increase in the cost of living which most households – from those of dukes to dustmen – are now facing with no end in sight.
Energy prices have doubled, the cost of the weekly shop is rising fast, taxes are going up (even if by stealth – i.e. not raising the thresholds) and the return of 20 per cent VAT on hospitality means dearer pub drinks and meals out. And all the while thrifty members of society are seeing the net value of their savings evaporate due to a combination of low returns and inflation currently rising at 6pc.
Just like owner-occupiers who are being further squeezed by higher mortgage rates, people living in private rented accommodation will feel the cost of living squeeze, which of course raises the spectre that some may start to struggle again with their rent.
So how should landlords react?
Happily, they will not face the same problem as arose two years ago because the new crisis is about a reduction in tenant spending power than a complete loss of income. Landlords, therefore, have much greater options before them than they did at the height of the pandemic.
Nevertheless, I would advise a reasoned approach, at least initially, should rent arrears – or the threat thereof - become a problem. That does not, of course, mean being taken for a mug: for example, someone who claims to be unable to afford to pay rent while taking out a Sky or Virgin television “package” needs to decide where his or her priorities lie.
However, during the pandemic landlords were able, mostly, to distinguish between tenants with genuine problems through no fault of their own, and those few chancers who tried to turn the situation to their own advantage.
It seems sensible, therefore, to keep an open mind when, or if, a valued tenant finds it difficult to manage as a result of the cost of living squeeze. If the tenant has a history of prompt payment and occupancy has been trouble-free, it is, surely, better to try and retain that person, especially as any shortfall in rent is likely to be paid up once the crisis eases or, if all else fails, is taken from the deposit (held by an independent third party) when the lease ends.
The alternative, eviction, can be both costly and time-consuming – and not all tenants are prepared to go quietly.
As for tenants who find themselves in financial difficulties, their predicament can be helped by not ignoring the issue and hoping it will go away. The sooner they approach their landlords and agree a workable strategy the more likely they are to retain a roof over their heads.
David Alexander is managing director of DJ Alexander
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