For landlords and property professionals, finding the right tenant for your rental property is fundamental for business success.
But who should be your target tenant?
It’s not as simple as finding someone who can pay the rent on time. Wide-ranging factors such as profession, marital status and long-term goals should also come into play when thinking about what you want from the arrangement and the safeguarding of your property.
Here, we look at the pros and cons of renting to different types of tenants so you can identify the right target tenant for you.
Choosing the Right Tenant
Before you start marketing your rental property, you first need to identify a target audience to gear your tenant search towards.
By identifying a specific tenant persona from the get-go, you will be in a better position to rent your property and attract your ideal tenant. Whether your first priority is the careful upkeep of your property, or to find a long-term tenant, establishing your needs and requirements at this stage will help narrow down the search.
When it comes to finding a good tenant, think about your future relationship and who you want to be dealing with on a regular basis. A good tenant looks different to different landlords. Do you want someone looking for a long-term let, or a you happy with a quick turn-around?
Whatever your needs, here are some of the pros and cons of different types of tenants;
High Income Tenants
The income of your target tenant depends largely on the type and size of the rental property you own and its location.
For example, landlords with property in central London will need to target high income tenants in order to meet monthly rent payments.
One of the biggest benefits of renting to high income tenants is that you can rely on sufficient rent return and are unlikely to have to chase up missed payments. However, a tenant with a higher income is likely to hold your property up to higher standards.
Any good landlord will be committed to ensuring their properties are pleasant, safe spaces to live in, but renting to this group requires a higher level of detail.
This means replacing carpets and furnishings more regularly and providing sought after benefits such as high-speed internet and modern security systems.
Low Income Tenants
If your property is located in a less costly area, it’s likely you will need to target lower income tenants.
Renting to tenants receiving housing benefits comes with its advantages and disadvantages;
- One disadvantage is that rent is paid to the landlord in arrears rather than in advance.
- There is also a lot of paperwork involved in renting to tenants on housing benefit and administration processes can be slow.
- Another issue is contents insurance. Premiums can rise when letting to this tenant group.
- Unfortunately, some landlords are wary of renting to tenants on housing benefit due to an assumption that their property won’t be looked after properly, and payments will be missed. However, this negative stereotype is unfounded and is down to a minority of individuals.
However, renting to this group comes will lots of benefits to landlords;
- Due to the lack of rental properties available, advertising your property as accepting housing benefit means you will have a large pool of prospective tenants to choose from.
- Tenants in receipt of housing benefit are often looking for long-term housing
- As the rental payments are made by the Department for Work and Pensions, payments should be regular and guaranteed.
Renting to Families
Renting to families comes with wide ranging benefits;
- For one, most families are looking for a long-term home as moving with children is a hassle usually best avoided.
- There has also been research to show that renting to families results in less property management time.
The downside is that with children, there usually comes more damage and wear and tear to your property. If you’re particularly precious about a certain property in your portfolio, you may want to avoid renting to large families with young children.
However, if you’re letting the property long-term, you will most likely be redecorating at the end of the tenancy agreement anyway.
Most families are looking for a rental home with a little extra space. Make sure you highlight this benefit of your property when attracting tenants. Families are also more likely to have their own furniture so may be looking for an unfurnished home.
Tenants with Pets
It could be debated what causes more damage to a property- children or pets! While lots of landlords refuse renting to tenants with pets outright, accepting these tenants may be to your advantage.
For one thing, you can charge more in rent. With rental properties that accept pets being few and far between, pet owners will expect to pay a little extra for the privilege. The extra maintenance needed allows you to justifiably charge a premium.
If you do decide to go down this route, obtaining a previous landlord reference from your potential tenants will alert you to any problems caused in the past.
Renting to Student Tenants
Students have a bad reputation when it comes to taking care of rental properties. However, the student rental market is ripe with opportunity, with student homes in high demand in University towns.
Here are some of the benefits;
- If you own property in a University town, finding tenants won’t be a problem.
- If you’re looking for short-term lets, students tend to move on after a year.
- Students are less fussy when it comes to appliances and furnishings, so if you have an older property with basic furnishings it shouldn’t be a problem. As long as your property complies with health and safety obligations and is a comfortable place to live, you won’t need to offer state-of-the-art appliances.
- Renting per room means higher returns!
But don’t forget to consider the following;
- Maintenance and repairs needed may be higher as there tends to be more individuals living in student properties.
- Students like to socialise. When renting to students you need to be aware of the neighbours as you might be called upon to deal with complaints!
- For most students, this is their first time living away from home. In place of a credit check, you will need to ask for a guarantor to safeguard your investment.
- There is growing competition in the student rental market, with purpose-built housing being created. Do your research before you commit.
Renting to Young Professionals
Young professionals are often favoured by landlords due to their independence and financial security.
Here are some of the advantages;
- While still young, this group are less likely to host big parties than students and tend to be more house proud, resulting in less wear and tear.
- With more experience behind them, young professionals are better able to deal with minor issues independently before asking the landlord for help.
- If you decide to rent an HMO property you can expect greater returns.
- Professional couples tend to be stable tenants and are better able to manage rent requirements with two incomes.
Here’s a few things to keep in mind;
- Like high income tenants, young professionals will expect certain living standards and mod cons. You may need to provide a dishwasher, high-speed internet and contemporary furnishings to attract this group.
- If your property is an HMO, you need to be aware of the added paperwork and responsibilities this requires. You may also need to consider potential conflicts between tenants.
- Young professionals tend to move jobs more often which may result in the premature end of a tenancy.
- Younger renters usually search online to find rental properties. Bear this in mind when choosing where to advertise your property.
Finding the Right Tenant
Once you’ve chosen a target tenant group, make sure you complete this checklist before renting your property;
- Meet your potential tenants face to face. It’s important to have a good relationship with your tenants and meeting in person is the best way to work out if it’s the right match.
- Ensure essential tenant checks are undertaken. No Letting Go offer a right to rent check service which is a legal requirement for landlords and letting agents in the UK.
- It’s also worth getting a credit history check and a previous landlord check to be on the safe side.
What Happens Next?
The rental property industry works both ways. If you want to attract your ideal tenant, you need to prove that you’re a responsible and organised landlord with the right safety checks in place.
No Letting Go provide a range of professional services to help streamline your workload and ensure you are fully compliant. From house viewings to inventory management, we can help during all stages of the rental process.
Browse our fully-compliant suite of letting services and feel confident that your property inventory management needs are taken care of