Winning the Long Stay: 10 Proven Strategies for Stellar Tenant Retention

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The Insider @ Houst
Last updated on
August 4, 2023

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Winning the Long Stay: 10 Proven Strategies for Stellar Tenant Retention

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As a landlord, the quest for a new tenant can feel never-ending. Despite the assistance of trustworthy tenant screening or property management services, each day a property remains unrented translates to missed profits, a predicament no landlord relishes.

Ah, but behold, the secret to successful tenant retention! Keeping tenants long-term reduces turnover, workload, and costs while maximising profits. The constant search for new tenants can be exhausting. Now, how do you go about mastering the art of tenant retention? In this article, we’ll explore 10 must implement brilliant tenant retention strategies.

For a quick overview of the key steps involved in effective tenant screening, take a look at the infographic below.

Infographic presenting a four-step guide to achieving higher tenant retention, including understanding tenant retention, prioritizing quality tenant management, incentivizing long-term tenancy, and improving through feedback and learning.

Table of Contents

Why is Tenant Retention Important?

When you cling to an investment that fails to generate returns, you're essentially letting potential cash flow slip through your fingers. Even worse, if your investment drains your funds, you incur further losses.

Vacant real estate properties embody these financial woes due to the lack of income and the expenses stemming from frequent tenant turnover. Preparing a vacant property for new tenants, engaging in real estate listings and marketing efforts, and securing legal services can lead to substantial costs.

Tenant retention is key to benefits for landlords and property managers. Here are some reasons why:

Stability in Rental Income

A loyal tenant brings forth stability. With each lease renewal, you revel in the certainty of continuous rental income flowing into your coffers. No more problematic gaps in revenue during prolonged vacancy periods!

Cost-Efficiency

Bid farewell to the hefty expenses of finding new tenants! Tenant retention means fewer advertising and marketing costs, reduced screening efforts, and relief as cleaning, repairs, and renovations become less frequent guests.

Lower Turnover Costs

As the revolving door of tenants slows down, so does the financial burden associated with high turnover rates. Money saved is money earned, and with tenant retention, you get to keep more of it!

Less Administrative Hassle

Dealing with new tenants means mountains of paperwork and administrative hassles. But when your tenants choose to stay, the paperwork party is toned down, and you can redirect your focus to other pressing matters.

Positive Property Reputation

A well-maintained property with content, long-term residents becomes a beacon of attractiveness in the rental market. Positive word-of-mouth spreads like wildfire, drawing more desirable prospects to your doorstep.

Long-Term Relationships

Building a strong rapport with tenants fosters trust and understanding. With time, you'll know their preferences, needs, and quirks, enabling you to cater to them better, leading to happier tenants and smoother lease agreements.

Calculating Your Tenant Retention Rate

Calculating Your Tenant Retention Rate

Calculating your tenant retention rate is straightforward property management. It provides valuable insights into the stability and attractiveness of your leased properties over a specific period, typically one to five years. To determine this rate, you divide the number of tenants chosen to stay in your properties during that time by the total count of leasable properties under your ownership. Multiplying the result by 100 yields the percentage.

Tenant Retention Rate = (Number of Tenants Retained / Total Number of Leasable Properties) * 100

Where:

  • "Number of Tenants Retained" refers to the count of tenants who have remained in your leased properties over a specific period (e.g., one to five years).
  • "Total Number of Leasable Properties" represents the total count of properties that you own or manage and are available for lease.

For example, consider a scenario with 28 properties in your portfolio; out of those, you have successfully retained 21 tenants. To find the tenant retention rate, divide 21 by 28, resulting in 0.75. Multiplying this by 100 gives you a tenant retention rate of 75%.

Ideally, you'd aim for a perfect 100% tenant retention rate. Achieving this indicates a strong and stable property management environment, which is undoubtedly desirable. If your tenant retention rate is low, don't despair. 

What is a Good Tenant Retention Rate?

When it comes to residential properties, a prudent goal is to retain around 60% of your tenants, which slightly surpasses the national average of 48%. If you had 120 tenants in June last year, you would ideally want 72 of those same individuals continuing to rent your properties.

For retail and commercial properties, the target for tenant retention should be set a bit higher at around 70%. Given their stable establishment, businesses tend to remain in one location for considerably longer than residents. However, as successful businesses grow, they might eventually decide to move on and secure their own space after saving up for a deposit. Having a high tenant retention rate is indicative of several positive factors:

  • Satisfied tenants: A high retention rate suggests that your tenants are content with their living or business arrangements in your properties.
  • Strong property management: Effective property management practices, responsive maintenance, and good communication contribute to tenant satisfaction and retention.
  • Stable income: Retaining tenants reduces vacancies, ensuring a steady and consistent rental income, which benefits property owners.
  • Lower turnover costs: High turnover rates can lead to increased expenses related to marketing, advertising, and preparing the property for new tenants. A lower turnover rate helps reduce these costs.
  • Positive reputation: Consistently retaining tenants enhances your reputation as a landlord or property manager, attracting more potential tenants in the future.

Steps to Ensure Tenant Retention

As a property manager, you hold a duty: ensuring the happiness and contentment of your cherished tenants throughout their living experience. Tenant retention rates emerge as the lifeblood of your property's prosperity, safeguarding precious time, money, and resources in the grand scheme.

Image on effective pre-screening of potential tenants.

Good tenants save you the hassle of finding new ones, the turnover cost, and potential property damage. Let’s have a look at the following steps to ensure tenant retention! 

  1. Pre-screen All Tenants

Landlords should have a host checklist to screen tenants carefully to reduce turnover. It emerges as the most crucial aspect of the long-term rentals process, for it determines your property's future trajectory. By conducting meticulous income, credit, and criminal background verifications, you lay the groundwork for a harmonious lease agreement. 

But that's not all! Delve deeper into the prospective tenant's history by contacting their former landlords for valuable insights. Unearth their track record of rent payments – were they timely and complete? Discover the rental rates they adhered to and how they maintained the property during their stay. Communication skills, too, hold relevance – did they shine in this department? And perhaps most importantly, learn whether their past landlords would gladly welcome them back.

You gather a treasure trove of information by asking open-ended questions and attentively listening to the responses. Early detection of any red flags empowers you to commence the lease with the utmost confidence, embracing the best possible tenant for your cherished property. Armed with knowledge and prudence, the winds of success shall blow in your favour, for you have secured a tenant who respects your property and the sanctity of the lease agreement.

Establishing thorough screening criteria and lease requirements is crucial for every property manager to ensure the property is well-maintained and protected during the rental period. Each property may have its own unique attributes, and the screening criteria must be tailored accordingly to find the most suitable tenants. Here are some common screening criteria that can be considered:

  • Smoking Policy: Determine whether smoking will be allowed inside the property or if it will be a smoke-free rental.
  • Pet Policy: Decide whether pets will be permitted on the premises. If allowed, specify the types and sizes of pets accepted, any restricted breeds, and the requirements for pet deposits.
  • Lease Term: Clearly outline the lease term, whether it's an annual lease, month-to-month, or another duration.
  • Income Requirement Criteria: Establish an income-to-rent ratio to ensure tenants have sufficient income to meet rental obligations.
  • Deposit Requirements: Clearly state the amount of security deposit required and any other upfront payments or fees.
  • Rental History Criteria: Consider the prospective tenant's rental history, including past rental references and their track record as a tenant.
  • Employment History Criteria: Assess the stability of the applicant's employment history to determine their ability to maintain a steady income.
  • Credit Score History: Check applicants' credit scores to gauge their financial responsibility.
  • Payment History: Review the applicant's payment history to see if they have a track record of on-time payments.
  • Non-medical Collections: Evaluate whether the applicant has any outstanding non-medical collections that may indicate financial instability.

Importance of prompt maintenance in property management.

A property manager must evaluate rental applications based on the established screening criteria. If an applicant does not meet the necessary qualifications or is not a good fit for the property, it is essential to deny their application.

  1. Make Maintenance a Priority

You've perfectly captured the essence of a tenant's frustration and the importance of prompt maintenance in property management. Indeed, there's nothing more exasperating for a tenant than enduring days or weeks of waiting for essential repairs to be addressed.

The key to success lies in being proactive and responsive to maintenance requests. Cultivating a network of reliable repair services or honing handy skills yourself ensures repairs are swiftly carried out, keeping your tenants content and your property in top-notch condition.

When a maintenance request reaches your ears, respond promptly – within a few hours ideally – and keep your tenants informed throughout the repair scheduling process. Dismissing or ignoring their concerns can plant seeds of dissatisfaction, potentially leading to tenant turnover at the end of their lease.

A well-maintained property acts as a haven of comfort, inspiring tenant satisfaction and increasing the likelihood of lease renewals. Regular inspections and maintenance act as guardians, detecting and addressing issues before they burgeon into major costly and time-consuming problems.

Responding promptly to maintenance requests showcases your property management team's dedication to excellent customer service, reaffirming your commitment to meeting your tenants' needs.

Stay adaptable and keep up with market trends and tenant preferences. Make timely updates to your rental property to remain competitive. Regular maintenance ensures your investment is protected and emergency repairs are minimised. A well-maintained property shows tenants you care about their living experience, fostering trust and long-term retention.

  1. Be Responsive and Maintain Good Communication

In today's digital world, tenants expect quick and easy communication. They want to reach property managers through phone, email, website, tenant portal, and social media for instant responses and convenience. As a property manager, fostering strong communication with your tenants lies at the heart of maintaining a positive relationship and a well-functioning property. A responsive, transparent, and caring approach to communication is the cornerstone of tenant satisfaction.

Yet, despite its significance, property managers often need help communicating effectively with their tenants. It is imperative to comprehend your tenants' unique needs and preferences regarding their rental property.

Each tenant brings their distinct communication style and preferred channels to the table. Embrace the art of understanding your tenants, for therein lies the key to tailoring communication strategies that meet their needs and exceed their expectations.

Here are some best practices to deepen your understanding of your tenants:

Communication Preferences

Acknowledge that not all tenants communicate in the same manner. Some may favour phone calls, while others prefer email, text messages, or even good old-fashioned mail. By grasping these preferences, you ensure clear and effective communication.

Tenant Surveys

Use surveys to gather valuable feedback from your tenants. Seek their input on communication preferences, their satisfaction with current methods, and areas where improvements can be made. Surveys can be conducted through online tools, email, or even paper surveys.

Regular Check-ins

Regularly contact your tenants to stay informed about their evolving needs and preferences. These check-ins can take various forms, in-person, over the phone, or via email. Consider reaching out after maintenance requests have been addressed or an event has occurred on the property.

Image showing a range of communication channels to cater to your tenants' diverse preferences.

Multiple Communication Channels

Offer a range of communication channels to cater to your tenants' diverse preferences. Providing options such as phone, email, and text messaging ensures they can communicate with you in the manner most comfortable to them.

  1. Incentivise Lease Renewals

Your tenant may need a gentle nudge to consider renewing their lease with you. Fear not, for this presents a golden opportunity to entice them with a delightful incentive!

Imagine the allure of an enticing reward that sparks their interest in staying. A lease renewal incentive could be as sweet as a one-month rent discount or a property upgrade that leaves them delighted. Even better, you could surprise them by including a utility bill in the rent, simplifying their life and adding a touch of convenience to their tenancy.

Now, timing is key! Reach out to your tenants at least 60 days before their lease comes to an end. This thoughtful approach gives them ample time to ponder their options and make informed decisions. Should they decide to embark on a new adventure elsewhere, fret not; you'll have sufficient time to embark on the quest for a new tenant.

The end of a lease marks a critical juncture for property owners as tenants contemplate their next move. While life's twists and turns may sometimes influence their choice, it is wise for landlords to put their best foot forward. Be the shining beacon that captures their hearts, for building strong tenant relationships is a treasured pursuit.

Imagine the possibilities! Partnering with local gyms or charming cafes to offer exclusive promotions or deals adds an enchanting touch to your tenant experience. And for those who choose to stay and renew their lease, why not grace them with a generous monetary incentive like a renewal month's rent discount? Incentives and heartfelt gestures can keep tenants. Be a thoughtful landlord.

  1. Keep Rental Rate Increases Consistent and Fair

Indeed, the temptation to raise rent each year and position your property at the top end of the market can be alluring. However, offering your tenants a good deal can prove more beneficial if you wish to foster tenant retention.

A reasonable or even great rent price becomes a powerful incentive for tenants to renew their leases. The fear of not finding another deal as appealing might lead them to stay put. While profitability is vital for the rental property business, excessively aggressive rental rates and frequent increases can drive tenants away instead of encouraging them to stay.

Maintaining a balanced approach is key. Instead of implementing rate hikes at every renewal, research local rental comparables. Ensure your property's rent remains competitive with similar rentals in the area. Consider pricing just below market rates and requesting only modest increases. This approach entices cost-conscious tenants, making it challenging to find a better deal elsewhere, thus increasing their willingness to continue their current lease.

Nevertheless, keep your ROI in mind when setting the rent price. Cover all expenses, including property tax, service fees, and maintenance, while ensuring a reasonable profit. If you need to raise the rent, consider modest monthly increments for tenants wishing to renew their leases. This slight increase typically will only partially impact your tenants, helping to maintain their satisfaction and retention.

You cultivate a win-win situation by striking the right balance between offering a good deal and ensuring profitability. Tenants find value and comfort in their lease agreements while you, as the landlord, enjoy a stable and content tenant base, paving the way to long-term success in the rental market.

  1. Be Flexible with Good Tenants

Due to the rise of rentals in the UK, nurturing a sense of understanding and compassion towards reliable tenants can foster a strong and lasting relationship.

Consider granting a little flexibility to tenants who have proven themselves trustworthy and responsible. Here are a couple of examples:

  • Wall Painting: Allow tenants to personalise their living space by painting the walls with their preferred colours or designs, with the understanding that they'll repaint them back to their original state before moving out. This empowers tenants to create a homely environment and fosters a sense of ownership.
  • Late Fee Exceptions: Life can be unpredictable, and tenants may encounter unforeseen challenges, such as illness or personal circumstances, leading to late rent payments. Understanding and making exceptions for late fees in such cases demonstrate empathy and support for your tenants during difficult times.

Embracing this understanding approach as a property manager creates a positive and nurturing environment. Tenants will feel valued, appreciated, and more likely to stay on in the long term. Building strong tenant relationships based on trust and respect creates a harmonious rental community, benefiting both the tenants and the overall success of your property management venture.

  1. Track the Pulse of the Local Market

As a landlord, staying informed about local rental rates is essential for tenant retention. However, it's only one piece of the puzzle. To truly boost tenant retention, you must also pay close attention to the amenities and upgrades offered in the surrounding market and the rental price. Consider your property from the perspective of a renter. Keeping tenants in an outdated, overpriced rental unit with no modern amenities is hard.

Tenants want good value for their money. If other properties offer better amenities at a similar or lower cost, tenants will consider them. To address this, periodically assess your property's condition and amenities compared to nearby rentals. Invest in upgrades and improvements that align with the preferences of your target renters. Consider modernising features, adding desirable amenities, or enhancing the overall living experience. Make your property more attractive and competitive to retain tenants. Tenants who feel they are getting good value and enjoy a comfortable living environment are more likely to stay.

To thrive as a landlord, keep an eye on the local rental market to maximise tenant retention. Here’s why:

Monitoring the local market allows you to keep track of rental rates, property trends, and tenant preferences

Stay Competitive

Monitoring the local market allows you to keep track of rental rates, property trends, and tenant preferences. Stay current, and you can ensure your rental property remains competitive and attracts quality tenants.

Set Competitive Rent

Understanding current market conditions helps you set competitive rental rates. Pricing your property appropriately ensures it appeals to potential tenants and reduces the risk of extended vacancies.

Adapt to Changes

Rental markets can fluctuate, influenced by economic conditions and population shifts. By tracking market changes, you can adapt your property management strategies accordingly, whether it's adjusting rent or making upgrades.

Identify Tenant Needs

Monitoring the local market lets you recognise changing tenant needs and preferences. Knowing what amenities and features are in demand allows you to tailor your property offerings and attract long-term renters.

Prevent Tenant Attrition

Keeping an eye on market trends helps you identify potential issues before they become problems. Proactively addressing tenant concerns and making necessary improvements increases tenant satisfaction and reduces turnover.

Maximise Profitability

Knowledge of the local market helps optimise your property's financial performance. Setting competitive rents and managing expenses ensures you achieve the best return on investment.

Being well-informed about the market positions you as a knowledgeable and reliable landlord.

Build Strong Relationships

Being well-informed about the market positions you as a knowledgeable and reliable landlord. Building strong relationships with tenants based on trust and understanding encourages lease renewals and fosters tenant loyalty.

  1. Take Tenant Feedback Frequently

As humans, we're not immune to errors, and tenants may occasionally bring issues or complaints to our attention. When this happens, listening attentively and genuinely considering their feedback is crucial.

Taking tenant feedback seriously demonstrates that you value their opinions and concerns, fostering a sense of trust and respect. Moreover, it provides an opportunity for continuous improvement in managing your property.

If you unintentionally cause inconvenience or discomfort, such as mistakenly scheduling a fire alarm drill at an inconvenient time, take proactive responsibility for the mistake. Offer a sincere apology and seek to rectify the situation promptly.

Acknowledging and rectifying your errors shows tenants that their well-being and comfort are paramount to you. This level of responsiveness and accountability encourages tenants to feel valued and cared for, increasing the likelihood of continued tenancy and fostering a harmonious rental environment.

  1. Provide Top-Notch Customer Service

Responsive and honest communication is a powerful tool for boosting tenant retention rates. Customer service plays a crucial role in successful property management, extending beyond efficient maintenance processing and prompt responses to tenant inquiries.

From the very beginning, providing a comprehensive tenant welcome packet during move-in is a thoughtful gesture. This packet should contain essential information, such as procedures, contact details, and property-specific tips, to help tenants settle in comfortably.

When issues or maintenance requests arise, the key is to respond promptly, ideally within the same business day. Quick and effective communication demonstrates that you prioritise your tenants' concerns and well-being.

Keeping the tenant informed of progress is vital throughout the maintenance or repair process. This reassures them that their issue is being handled diligently and professionally. Being transparent and communicative fosters trust and satisfaction among tenants.

Building relationships with trusted vendors allows for quicker response times to repair needs, contributing to a smooth and efficient resolution of issues.

  1. Send an Exit Survey

Tenant turnover is a natural part of the rental business. When tenants do move out, seizing the opportunity to conduct an exit survey can be immensely valuable in improving your rental business. Here are some pointed yet thoughtful questions to consider asking:

  • Why have you decided to vacate? Understanding the reasons behind their decision to move out provides crucial insights into any issues or areas for improvement.
  • What would you have liked to see from the property manager? Gathering feedback on your property management approach can help identify areas where you can enhance tenant satisfaction and communication.
  • Were you satisfied with the property? Why or why not? Evaluating their level of satisfaction with the property sheds light on its condition and any possible amenities or upgrades that tenants might desire.
  • Is there anything that could have enticed you to stay? Discovering what could have influenced their decision to remain helps you understand tenant preferences and what improvements might enhance retention.

You create an open dialogue with your departing tenants by posing these questions respectfully and constructively. Their candid responses can guide your efforts to refine your rental business and address potential pain points. Utilising this valuable feedback, you can implement changes that improve tenant experiences and boost overall satisfaction for current and future residents.

Conclusion 

The strategies we discussed offer many benefits, yielding long-term advantages for your property management endeavours. By implementing these approaches, you can save valuable time, money, and resources. Being proactive in tenant retention prevents frequent turnover, reducing the costs associated with finding and screening new tenants and preparing the property for new arrivals.

Moreover, maintaining a competitive edge in the rental market is crucial for sustained success. Prioritising tenant satisfaction and offering attractive incentives ensures your property remains desirable and sought-after among potential renters. Keeping your property competitive attracts new tenants and maintains high occupancy rates.

Increase Tenant Retention and Satisfaction with Professional Property Management

Hiring someone to manage your property is a strategic step towards increasing tenant retention and delivering excellent customer service. At Houst, we take pride in our team of dedicated property managers and support staff who prioritise the needs of our clients and tenants. We’ll take care of your Airbnb listing and Airbnb revenue

From the initial meeting to every interaction after that, we recognise the importance of tenant retention. Our goal is cultivating positive and long-lasting relationships with tenants, ensuring they feel valued and well-cared for throughout their tenancy. Let us maximise your rental profit potential. We have local expertise and can implement effective strategies to keep your property competitive and appealing to tenants. So, become a part of Houst Franchise Partnership Program now! 

Frequently asked questions FAQs on 10 Must Implement Brilliant Tenant Retention Strategies

What is the average retention rate for a tenant?

The average retention rate for a tenant in the UK is 60%. This means that, on average, 60% of tenants stay in their rental property for at least one year. The retention rate can vary depending on several factors, such as the property's location, type, and rent.

How can I communicate with residential tenants?

Effective communication is key to a good landlord-tenant relationship. Here are some tips:

  • Use clear and simple language to communicate effectively.
  • Treat tenants with respect and professionalism. 
  • Respond promptly to tenants, and keep them informed of important changes.
  • Provide tenants with ways to contact you, such as a phone number, email address or website.
  • Hold regular meetings and be open to feedback.
  • Address any complaints professionally and on time, and be willing to find a compromise. 
  • Build a positive relationship with your tenants; remember, they are your customers.

How can I automate the lease renewal process?

Automate the lease renewal process with the following:

  • Lease renewal reminders
  • Online renewal forms
  • Automated lease terms and rent adjustments
  • Digital signatures
  • Tenant communication platforms
  • Automated rent collection
  • Standardised renewal templates
  • Cloud-based document storage
  • Data analytics for tracking and improvements.

The Insider @ Houst

The Insider @ Houst

The Insider team at Houst is dedicated to providing up-to-date and relevant information on short-term rentals. If you have hosting inquiries, please write to us at expert@houst.com. For guest inquiries, reach out at guest@houst.com. We are here to help you navigate the world of short lets and look forward to assisting you with your needs.

The Insider @ Houst

The Insider @ Houst

The Insider team at Houst is dedicated to providing up-to-date and relevant information on short-term rentals. If you have hosting inquiries, please write to us at expert@houst.com. For guest inquiries, reach out at guest@houst.com. We are here to help you navigate the world of short lets and look forward to assisting you with your needs.

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