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Inflation and regulations are squeezing landlords and tenants. Discover how landlords can adapt and protect their investments during the cost‑of‑living crisis.
Written by
Ben Luxon
PUBLISHED ON
Jun 17, 2025
The cost of living crisis continues to challenge both tenants and landlords across the UK. As of early 2025, roughly 7 million people are behind on at least one essential bill.
What began as a spike in energy prices and inflation in 2022 has now become a long-term affordability issue, particularly as interest rates remain high and essential costs strain household budgets.
For landlords, this ongoing pressure has real consequences. Tenants struggling to pay energy bills or buy groceries may also fall behind on rent, and landlords themselves are dealing with higher mortgage repayments and maintenance costs. This all comes at a time when regulations are becoming more lenient towards renters.
The key question then is, how can you protect your investment without adding unnecessary strain to your tenant relationships?
The last thing any landlord wants is to evict a tenant, but they also don’t want to be out of pocket themselves because the tenant can’t afford to pay them.
To add to this, with many landlords still locked into 5%-6% mortgages, your own operational costs are higher.
In the current conditions, some landlords may be reluctant to pass on this cost to their tenants and may feel the need to absorb it themselves somehow. However, with Section 24 getting rid of the mortgage interest deduction, there really isn't any way for landlords to swallow that extra cost.
So, what can you do? You can arrange rent protection insurance, which guarantees to cover a landlord for loss of rental income. Additionally, some products also include legal expenses and advice.
Why it rent protection matters: Higher interest rates may force you to increase rent—but that can risk tenant arrears.
Checklist:
In 2025, bills included tenancies that put you at financial risk. Tenants have no real motive to be sparing with their energy usage if you’re the one paying for it. You will also be unable to monitor how much energy your tenants are using, which means you can’t put a block on them using more than you are willing to pay for.
However, there is an opportunity here as well. Listing your property with bills included will appeal more broadly to the rental market, as tenants will be aware of how much they will be paying each month and don’t need to shop around themselves to try to get the best deals, making it easier for them to budget. This is particularly relevant in areas with more competition among landlords, as there’s a greater need to make your property stand out.
Risks:
Opportunities:
With household bills still eating up a significant portion of tenants' income, energy efficiency has shifted from a ‘nice-to-have’ to a key concern for renters. And that has a direct knock-on effect for landlords.
Originally, landlords were expected to upgrade rental properties to a minimum EPC rating of C by 2025. However, the government delayed this mandate in late 2023, with the new proposed deadline now set for 2028. Still, it’s better not to wait around. Improving your property’s energy performance now will play a part in reducing tenant turnover and justifying higher rental prices.
More energy-efficient homes are cheaper to run (a huge draw in a cost of living crisis), and they are also less likely to result in arrears from struggling tenants
If you’re at a loss for what upgrades you should make, here are a few ideas to get your started:
Why do it? Lower bills = lower arrears + stronger tenant retention.
Related: How To Improve Your EPC Rating For The 2025 Regulation Changes
Government support schemes have come a long way since the original Energy Support Scheme and one-off cost of living payments introduced in 2022–2023.
In 2025, landlords and tenants may be eligible for a few different schemes and discounts:
It’s worth signposting your tenants to these schemes too if they are struggling to pay rent. It’s a way of showing care and it also means they are likely to end up in arrears.
If you need to apply for help or prove rental arrears, Landlord Studio allows you to track tenant payments, log communications, and keep documentation in preparation for this scenario.
Learn more about how Landlord Studio property management and accounting software can help you stay on top of regulatory demands and your rental property finances →
Some landlords have previously not insisted on rent guarantors for their properties and their tenants’ rent. This is a normal demand in the context of student properties (where their parents are usually relied upon to pay the rent), but it is less common for professionals who have a job with a steady income.
However, in 2025, within a harsh economic climate, opting to ask for a guarantor is a sensible move, even in unusual contexts. This can save you from bearing the cost of any potential arrears.
Insight: More tenants are downsizing and moving out of unaffordable city centers.
Another result of the cost of living crisis is that more tenants may choose to downsize from larger properties to smaller ones. This could open up a lucrative investment stream for landlords who have a selection of one or two-bedroom properties on their lists, which have been traditionally harder to let than those with three or more bedrooms.
It isn’t all doom and gloom for landlords, but it pays to listen to your tenants and be empathetic to their situations.
The cost of living crisis is causing sleepless nights for many. By offering some form of agreement or compromise and being fair in your dealings, you will build trust with your tenants, and they will be more likely to put their rent at the top of their payment priorities.
Landlord Studio has been designed to help you stay on top of rent tracking, manage arrears before they spiral, and keep all your documents and communications in one place - making it easier to support your tenants while protecting your own bottom line.
Create your free Landlord Studio account today.
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