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Three ways for landlords to tackle the cost of living crisis

Posted 8/05/2022 by Reeds Rains
Categories: Landlords/Lettings
Blue sofa in a living room

The cost of living crisis is impacting everyone. While it’s those on lower incomes who are feeling the squeeze more than higher earners, we’ve all noticed that going about our daily lives has become more expensive.

Inflation is currently around 7% - substantially higher than the Government’s target of 2% - and the Bank of England believes it could reach around 10% this year. And because inflation is rising faster than wage growth, it means the money in our pockets simply isn’t going as far as it used to.

What’s caused this steep rise in the cost of living?

Well, it began last year, as restrictions on movement and work absences due to the pandemic began to take effect on both the domestic and international supply and demand of goods and services. In particular, the huge surge in demand on shipping once lockdowns lifted massively increased transportation costs.  The current COVID lockdowns in Asia are having an impact on the import of some goods to the UK and the war in Ukraine is now creating food and energy supply issues that are pushing up prices.

Wage rises and higher National Insurance Contributions in the UK have also contributed to the increase in the price of services, while the sharp rise in oil and gas prices globally, combined with the increase in the domestic energy cap in April, means everyone has seen their energy bills shoot up.

While all this is certainly bad news for consumers this year, the medium-term outlook from the Bank of England is more positive, as they believe the main causes of the current high inflation aren’t likely to last too long. They expect inflation to fall in 2023 and drop back to close to 2% in around two years.

But finances are likely to be tight for both landlords and tenants over the next couple of years. Tenants are going to have to spend more of their disposable income on energy and fuel bills, food and other general lifestyle costs, meaning some might find it harder to afford their rent. Meanwhile, not only is your own rental profit going to be under pressure, but the increasing cost of property maintenance and repairs could reduce profits further.  

Here are three steps you can take that should help you, your tenants and your property ride the current inflation wave, so that your rental business emerges from the cost of living crisis in a strong position:

1. Know and review your costs

Even if you’ve already reviewed the costs related to your rental business in the last few months, it’s worth doing it again, as prices are increasing so rapidly. Make sure you know exactly what’s going out each month and try to plan ahead. You’re unlikely to be able to reduce costs at the moment, but you may be able to agree deals to fix a price now for the next 12-18 months on some services.

If you have a Buy to Let mortgage, that’s likely to be one of your biggest costs, and interest rates are currently climbing, following a steady rise in the Bank of England base rate - from 0.1% in mid-December to 1% in the first week of May and to 1.25% on the 16th June. If your current deal is coming to an end any time within the next few years, speak to a mortgage adviser now to find out whether it might be beneficial to switch sooner rather than later.

For help regarding your mortgage, do contact our partners at Embrace Financial Services who have mortgage advisers nationwide that can help explain your mortgage options over the next few years.


Embrace Financial Services usually charges a fee for mortgage advice. The precise amount of the fee will depend upon your circumstances but will range from £499 to £999 and this will be discussed and agreed with you at the earliest opportunity.

2. Look at how you can keep utility costs under control

The cost of energy is likely to be one of the biggest concerns for both you and your tenants at the moment. So the first thing to do is shop around to make sure you’re on a good deal and, secondly, if you don’t already have a smart gas and/or electricity meter, it’s worth requesting one from your supplier now. There is no upfront cost to switch and doing so can help both you and your tenant keep utility costs under control:

  • You get a portable in-home display device that communicates wirelessly with your meter, so you can put it somewhere convenient
  • The device shows your usage in near-real time, allowing you to easily see which appliances and activities are using the most energy, and therefore where you might be able to make savings
  • Readings are sent automatically to the energy supplier at least once a month, so your bills will be accurate
  • For those on prepay, the account can easily be topped up via an app, phone or even text, reducing the chance of running out of credit.

If you pay the bills for your rental, you can arrange for your tenants’ meter to be switched over, and if they pay their own bills, direct them to the Smart Energy GB website and encourage them to contact their supplier.

3. Be prepared to invest in repairs and renovations

While you might be tempted to cut back on property maintenance and upgrades for the foreseeable future, it’s important to keep your property in good condition. Not only is it a legal obligation to maintain certain standards for your tenants, you also want to encourage good tenants to stay and if they do move out, you need to be able to re-let quickly at a good price.

In addition, regular repairs and renovations go a long way to protecting and potentially improving the capital value of your investment, so think of this expenditure as an investment, rather than a cost. And remember, repairs and replacements can be offset against your income tax bill, while the cost of capital improvements will be deductible from your capital gains when you sell.

If you’d like any advice on where it’s worth spending money when it comes to renovation and refurbishment of your rental, or you’d like to discuss how to maximise your rental profits over the coming months, we’re always here to help. Just get in touch with your local Reeds Rains branch and have a chat with one of the team.

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The Reeds Rains Content Marketing Team

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