Home / Tug of War or Team Effort? How better rentals can pull lenders and landlords to mutual success
1st October 2024
George MacMillan, Partner & Head of Banking & Real Estate Finance
In our previous article, we explored the challenges landlords face amid tightening tenant laws and how lenders must adapt to the shifting landscape. But what if these changes aren’t just obstacles, but opportunities? In this follow-up, we’ll flip the script and explore how landlords improving their rental properties could actually benefit lenders, creating a win-win scenario for all parties involved, especially the tenants. Here’s why better homes could mean better loans for lenders.
In the tug-of-war between landlords and tenants, it’s easy to think lenders are just standing on the sidelines, waiting to see who falls into the mud. But what if, instead of a battle, landlords were offering something better—a win-win where tenants get great homes, and lenders get peace of mind?
The days of the “slumlord” stereotype may soon fade. With tenant rights growing and legal requirements tightening, many landlords are starting to level up their game. Think fewer peeling wallpaper jobs and more “luxury refurbishments.” The push for higher standards—driven by laws like the Minimum Energy Efficiency Standards (MEES) and tenant-friendly reforms—means landlords are more motivated than ever to provide better living spaces. And this isn’t just great news for tenants; it’s a golden opportunity for lenders.
A landlord investing in their property isn’t just beautifying a home, they’re securing a better future for everyone. High-quality rental properties are more likely to attract long-term tenants, reduce turnover, and ultimately, keep mortgage payments rolling in without a hitch. After all, happy tenants mean fewer vacancies, more reliable rent payments, and less stress on the landlord’s side.
For lenders, that means lower risk. A well-maintained property, with satisfied tenants who aren’t constantly planning their escape route, is a better bet for financial stability. Lenders get the reassurance that their client (the landlord) won’t face costly void periods, while tenants get to live in a place that doesn’t make them long for the next available moving van.
The shift towards better rental living isn’t just a trend, it’s a necessity. More people are renting longer, and expectations are rising. This is where lenders can truly shine. By supporting landlords who invest in quality improvements, lenders can align themselves with a movement toward better living standards for tenants while securing more reliable investments for their own portfolios.
So, instead of fearing the latest tenant-friendly legislation, perhaps it’s time for lenders to embrace it. After all, better homes mean better loans and that’s a win everyone can get behind.
Ready to bet on better rentals?