The cost-of-living crisis is having a knock-on effect on renters’ expectations, with tenants reevaluating what they want from a property beyond the property itself. Lavanda CEO Fred Lerche-Lerchenborg anticipates the rental trends we’ll see in 2024.
By Fred Lerche-Lerchenborg, CEO, Lavanda
Generation rent is in full effect with more people renting today, and for longer, due to a combination of factors including rising house prices, stagnant wages, stricter lending criteria and increased debt levels. In fact, it’s estimated there are around 8.5 million households renting in the UK, 53% of which are in the private sector.
The economic conditions do not make it easy for renters. Competition is fierce and affordability is low. But it’s not the case that consumers will apply to any property that comes on to the market; they are discerning and demand value for their money. Landlords and operators who focus on value-added services that make life easier and more convenient are the ones that will have the most attractive and competitive propositions.
Here are four key asks we’re likely to see gaining traction in 2024.
Flexible leases are highly sought
Flexible leases are good for both the landlord and the tenant. Long-term leases are generally considered to pose fewer risks to landlords as they provide stability and predictability, which allows for better financial planning and management.
However, in the current economic climate where renters have a heightened awareness of their own spending habits, operators may find themselves with vacant properties on their hands due to the difficulty in securing tenants willing to commit to long-term contracts, negatively impacting occupancy rates and overall net operating income (NOI).
Shorter leases offer tenants both flexibility and freedom, enabling them to relocate easily if their circumstances change. For the landlord, there’s the benefit of being able to charge a premium for the flexibility offered, which is a great incentive for operators to provide a range of options catering to diverse preferences.
Subletting agreements within contracts
Renting out your property when you’re not living in it is a growing trend that lets tenants make some extra cash. This can provide people with money towards their travels, for example, or it can help to make their rent more affordable.
In the US, Airbnb has teamed up with ‘Airbnb-friendly’ apartment buildings to make it easier for people to sublet their home part-time. It’s likely we will see an influx of UK landlords and operators allowing subletting as part of their contracts in 2024.
Landlords can retain a level of control over subletting agreements by putting some rules in place, helping to mitigate any worries or risks they may have about this type of initiative. Rules could include limiting how long a sublet can last, banning certain types of guest, and charging a subletting fee.
Financially, it also helps the landlord to make an additional income with little effort. Beyond that, subletting has wider financial benefits as guests will spend money at nearby restaurants, shops and attractions, boosting the local economy.
Physical and mental wellbeing is prioritised
Since the pandemic, the line between work and home has blurred for many, with numerous studies highlighting the impact that remote working has on our wellbeing. One study by the Royal Society of Public Health (RSPH) found that two in three people feel less connected to their colleagues when working from home, and over half say they find it harder to switch off when not in an office. As for the physical, musculoskeletal problems are much more likely to occur when a person is sat on a bed, sofa or in an unsuitable chair all day.
With the amount of people working from home these days — either full-time or on a hybrid basis — operators have a responsibility to create a healthy and supportive environment for their residents. This can be achieved through the creation of mixed-use developments with amenities such as an on-site gym, coworking spaces or social spaces where people can connect with one another.
These amenities make properties more attractive when compared to competitors who do not have any facilities beyond the usual. Furthermore, landlords can command higher rents.
In addition, operators can have an edge over their competitors by offering pet-friendly communities, remembering that pets have been proven to help with our physical and mental health too. Currently, this is not something all landlords are happy to do, but with the proposed Renters (Reform) Bill it looks set to become the standard. Part of the proposed legislation aims to ensure landlords cannot ‘unreasonably’ block tenants’ requests to have a pet.
Technology equals happy tenants
Landlords will really start to harness a multichannel approach to customer service in 2024. Not everyone wants to interact with landlords or property managers the same way, whether it’s paying rent, submitting maintenance requests, or simply communicating with staff. Offering multiple channels of communication empowers tenants to choose the method that best suits their needs and schedule.
Resident apps are becoming increasingly commonplace, enabling tenants to do just that. Using AI-powered chatbots or virtual assistants, tenants are also encouraged to ‘self-serve’, helping to free up human staff to handle more complex matters. AI can also streamline other day-to-day functions, such as the check-in and check-out process, further enhancing the tenant experience.
By offering a dedicated app, landlords can collect rich data around tenant preferences and dislikes, allowing them to more rapidly refine and optimise the resident experience. This leads to significantly improving engagement and retention, and may encourage new tenants in the form of referrals; after all, word of mouth plays a key role in the rental sector.