In the ever-evolving property landscape, one fundamental truth remains – tenant retention is the cornerstone of any successful property business.
Landlords who can recognise the value inherent in keeping their tenants content and committed for the long term will undoubtedly enjoy a much more profitable and sustainable property business.
Tenant retention isn’t just about maintaining occupancy rates, it’s about fostering an environment where both landlords and tenants thrive, and there are many compelling reasons why tenant retention should be at the forefront of every landlord’s strategy.
As seasoned landlords and property managers will attest, the benefits of tenant retention extend far beyond avoiding the hassles that come with vacancy turnover. Whether it’s to boost financial stability, reduce operational costs or foster a more harmonious living environment, we’ll explore 15 ideas for landlords to boost tenant retention in 2024.
Why is tenant retention important?
Happy tenants equal a happy landlord. Tenant retention can save landlords money and is easier than having to regularly find suitable new people to occupy a property for rent.
Tenant retention also delivers a steady, more predictable flow of income while at the same time reducing the myriad expenses associated with vacancies, screening new tenants, and marketing a property.
As the costs associated with letting out even one property are often considerable, securing a reliable tenancy becomes a landlord’s strongest asset when they own multiple residences.
A vacant property ultimately means that the landlord is losing out on rental income. With mortgage responsibilities to meet, it can soon feel like a nightmare to have a property unoccupied. Tenant retention is also vital for financial peace of mind and business viability, bypassing negative consequences like missed payments and fees.
Additionally, besides the potential security risks of having an unoccupied rental property, this can allow maintenance issues to develop. Where no tenants are living in a property, the general condition of the property can deteriorate quickly, causing damage and incurred costs further down the line.
How to calculate tenant retention rates
To improve your tenant retention rate in the future, it is vital to establish a baseline and understand your current tenant retention rate. As with any retention approach in business, finding a new tenant could cost you five times more than if you can keep your current tenant(s) in situ. Knowing this rate is a helpful piece of insight for your business.
You can calculate this user rate in four simple steps:
- Begin by recording how many tenants you had at the start of the year or any given month (e.g. 10 tenants).
- Add up how many tenants you have after a year/month has passed (e.g. 8 tenants).
- Divide the latter figure by the first (e.g. 8 divided by 10).
- This sum gives a figure of 0.8 which you then need to times by 100 to give you your tenant rentention rate as a percentage.
For our example, a landlord would have a tenant retention rate of 80% if they had 10 tenants at the start and 8 after the calculated period.
Now we’ve looked at calculating your tenant retention rate, lets look at some ideas for boosting tenant retention in 2024.
How to boost tenant retention
Whilst some change is expected when renting out a property, increasing tenant satisfaction can boost tenant retention. While not all of these points will be applicable in every scenario, try to consider implementing as many of the following measures within your tenant retention plan.
- Allow them to personalise their rental home
- Let your tenants keep pets
- Maintain clear communication with your tenants
- Be flexible and understanding
- Ensure the rent is a fair price
- Introduce incentives for lease renewals
- Conduct thorough tenant checks beforehand
- Build a strong landlord-tenant relationship
- Boost the EPC rating of the property
- Request tenant feedback
- Take their feedback onboard
- Stay on top of vital maintenance
- Do your research
- Stay ahead of the times
- Digitise your inspections
1. Allow them to personalise their rental home
Home is where the heart is, so letting your tenants decorate, put up pictures and personalise their space can help them feel settled, staying for longer. For example, 19% of tenants want to repaint the colours of a room, but feel that they’re unable to make slight changes to make it their own without having to constantly request permission.
2. Let your tenants keep pets
As a nation of animal lovers, many renters will immediately discount a property if it states no pets. Responsible young families may also decide to move out when they decide it’s time to introduce a dog or cat. We recently discussed a Confused.com survey which found that tenants with pets pay more than others, so it can be a massive draw.
3. Maintain clear communication with your tenants
Everyone should know what’s expected from both themselves and the other party when signing the tenancy agreement. Offering consistent and clear communication through email, text or phone calls will preserve good relations and ensure issues are reported promptly during the lease and between periodic inspections.
4. Be flexible and understanding
It’s not unheard of for tenants to contact their landlord at unsociable times or on weekends. This is part of running a property business. Likewise, flexible landlords who waive late payment fees when a genuine change in the tenant’s circumstances has occurred will see fewer tenancy changeovers.
5. Ensure the rent is a fair price
A property that maintains rental costs is more likely to help improve your tenant retention rate. Tenants will appreciate that the current economic climate could lead to mortgage increases but will feel more valued if any rent increases are fair and few.
6. Introduce incentives for lease renewals
Given the expense and disruption of finding new tenants, it is usually preferable to keep the same tenants for longer. Encourage them to stay for longer in your property with discounted rent or permission to keep pets or decorate.
7. Conduct thorough tenant checks beforehand
When searching for new tenants it is always wise to check their address history or ask how long they intend to stay in your property. Some will only want to live there temporarily, which will lower your tenant retention rate. Others will be seeking a home for the foreseeable future.
8. Build a strong landlord-tenant relationship
No one living in a rented property wants to feel treated like a customer rather than a valued tenant. Small gestures such as remembering their names, greeting them with a smile, and checking in by email are three strategies to help achieve this foundation according to Parcel Pending. A happier more content tenant is likely to remain with you for more time.
9. Boost the EPC rating of the property
Although this will require financial investment, making energy-efficient improvements can have two benefits. This will not only increase the value of your property but make it more attractive to high-quality tenants in the long term, given the comfort and financial savings they’ll experience. A higher EPC rating can be achieved by installing a more energy-efficient boiler, double glazing, programmable thermostat, and LED light bulbs, as we explored in our article New Landlords: 8 Tips for Success.
10. Request tenant feedback
Part of growing your property business starts with gauging your performance in the minds of tenants. Sending easy-to-complete tenant surveys shows that you care about their opinion and can give valuable insights into how your business could be run better (and avoid tenant churn).
11. Take their feedback onboard
Houst advises that “Taking tenant feedback seriously demonstrates that you value their opinions and concerns, fostering a sense of trust and respect”. For example, maybe the tenant was unaware that the fire alarm test was scheduled first thing every Saturday morning. Knowing this will allow you to apologise and repair a favourable relationship with the tenants who will be less likely to look elsewhere after the tenancy term ends.
12. Stay on top of vital maintenance
You can boost tenant retention by being a timely and responsible landlord. Always ensure that you schedule essential maintenance and repairs whenever they are due or reported. Liaise with trusted tradespeople and gas safety engineers to preserve your investment. You don’t want to become known as a landlord who is always late with maintenance or arranges substandard, temporary fixes.
13. Do your research
Another way of enticing your tenants to renew their tenancy lease is identifying what their needs are before they move in. Researching the local market will help you predict renters’ requirements and attract premium tenants who are searching for the facilities that your property offers.
14. Stay ahead of the times
When was the last time you compared your property to the competition? The truth is that tenants are unlikely to stay somewhere that lacks modern amenities. By introducing the facilities and clean modern decoration that renters expect today, your tenants will feel less inclined to relocate.
15. Digitise your inspections
Regular inspections help both parties by showing that the tenants are looking after your property. However, by digitising these inspections you can both receive a copy of the results. Tenants who are kept in the loop will feel more secure in their homes and may not look elsewhere, as we covered in 7 reasons why you should digitise your inspections.
If you want to boost your tenant retention rates and make your inspections and reporting simpler and faster, book a demo with Inventory Base today.