With Brexit on the horizon, landlords need to consider the needs of the modern tenant, the “evolving tenant” as Sanjeev Patel, managing director of PPP Capital, terms him or her.
Writing for Property Week, Mr Patel thinks that Brexit is having an impact in the rental as well as the for-sale market.
Given the multifarious changes to the market: regulation changes and consequent risk for landlords; slowing growth or in some cases declining rental prices, dips in property values; possible interest rate hikes and the return of inflation, with the consequent impact on landlords’ profit margins and tenant affordability, and the uncertainty for EU nationals as tenants, there are challenges ahead.
But, says Mr Patel, this turbulence can be an opportunity for landlords who are able to “bring some stability to the rental sector and move forward with the evolving tenant.” While we wait for the eventual outcome of Brexit, landlords can take a responsible tenant-centred approach, an enlightened approach which will benefit not only their tenants, but their businesses as well.
Speaking from the point of view of an institutional investor as MD of PPP Capital, his views are no less pertinent for small-scale or small portfolio landlords who compete in the same marketplace.
Starting in 1971 as a standalone Confectionary, Tobacco and Newspaper (CTN) store in Paddington, central London, PPP Capital now controls a large international group with interests in real-estate development and property management as well as retail and leisure.
PPP has been developing and renting property for over 15 years, but in the past few years, says Patel, “we have had to think more creatively in the face of Brexit uncertainty about our approach to the evolving tenant.”
Patel thinks he has found strategies in property management which have proved effective in attracting and retaining good tenants, and he is confident his approach will help PPP’s portfolio whatever Brexit brings.
The Tenant’s Changing Profile:
Many tenants are now pet owners, says Patel. “Landlords are often reluctant to accept pets, but we give applying tenants the chance to describe their pet before we decide whether to accept. We also suggest putting a clause in the contract about having pets in the property. In our experience, if we show flexibility and care as a landlord, we receive the same respect in return.”
Mr Patel is a big believer in engaging in efficient two-way conversations with his tenants: PPP uses property maintenance software that updates tenants in real time. This, he says, makes tenants feel connected to their landlord and eliminates rounds of calls or emails. It speeds up simple maintenance requests, but also builds trust between both parties, he says.
This software enables a management company, tenants, contractors and tradespeople to access a central hub, separately and simultaneously making things easier for all involved. The digital maintenance log created also helps the company to analyse costs and see if properties are costing more than budgeted.
More tenants now enjoy the flexibility of renting and see themselves as long-term tenants rather than homeowners. From the landlord’s perspective, if this is achieved, it can give them longer term security, free from expensive void periods. This type of tenant will generally show extra care for the property, treating it more like their own home, and when they are happy with the package as a whole, will stay for years. So, thinks Patel, “it is often worth investing in some ‘extras’ such as smart home systems, underfloor heating or safety features such as alarm systems and great outdoor lighting.”
Another innovative idea that Mr Patel advocates is giving something back to the community; sponsoring local community initiatives, green initiatives and giving to local charities, all helping to create goodwill between the landlord, tenants and the community they live in.
Renters’ needs are evolving, says Patel, and tenants’ decisions to stay long-term are predicated on not just the basics that every tenant would expect, but on a landlords’ attitude to the peripherals, such things as diverse tenants and how responsible they are as a landlord.
“There are ambiguous times ahead, but private and corporate landlords with mid-to long-term buy-to-let and build-to-rent properties should remain very optimistic about the future… Let’s focus on the long-term yield while doing our best to be responsible landlords with solid portfolios occupied by respectful tenants.” says Mr Patel.