How can I increase the income from my property?
With tax changes starting to hit some landlord’s profits and a continuous raft of legal changes, often requiring additional investment from investors, many landlords would benefit from making sure they are maximising their income to ensure profits are maintained.
Here are some hints and tips to help you protect your monthly profits, now and in the future:
Can you reduce expenditure?
If you haven’t reviewed your costs recently, you may find you can make some savings here. Mortgage payments are likely to be your biggest monthly cost and lenders often review their rates every quarter, and currently Buy to Let finance is quite a competitive space, so it is worth speaking to a broker to find out whether you could be on a better product for your circumstances. With all the uncertainty surrounding Brexit, do seek advice about whether it is worth considering a fixed-rate deal, to give you some certainty for the next few years and protect you against any BoE base rate rises. Contact our mortgage advisers for a free no-obligation review
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Embrace Financial Services usually charge a fee for mortgage advice. The amount of the fee will depend upon your circumstances and will be discussed and agreed with you at the earliest opportunity.
In addition to mortgage costs, check to see whether you could reduce your landlord insurance bill. As with any insurance, if you tend to let it automatically renew every year, you might not be on the best available premium, so it’s worth a review - particularly if you have several properties. If you have more than one property, it may be worthwhile considering a portfolio policy as this may reduce your overall costs and will certainly make your admin easier. We do offer insurance cover and might be able to help reduce your costs, do get in touch.
Check your utility bills
If you’re an House in Multiple Occupation (HMO) landlord and pay utility bills yourself, are you on the best deal? Do shop around for the most cost-effective providers. Generally speaking, using a single supplier for all your utilities keeps your costs low and makes administration much easier, with everything on one bill.
Make a maintenance deal
If you have a few properties and use different local contractors for cleaning, gardening and other maintenance, it’s worth investigating whether you could reduce costs by using a bigger regional or national company to provide those services, this may be something your local Reeds Rains office could help with
Could you increase your existing tenant's rent?
Many landlords who have a good, long-term tenant, may not want to rock the boat, but an increase every one or two years is not unreasonable; bear in mind that social housing rent has historically increased rents in line with inflation, so do have a think about when the last time was you increased your tenants rent.
The extra income can help to fund redecorating the property for the tenant or indeed go towards a more efficient boiler, helping overall to reduce your tenants housing costs.
For example, the latest inflation figures for August show the general cost of living increased by 2.4%, so if your rent and costs have not changed over the last 12 months, you’ve had a real-term drop in income.
If you haven’t increased rent in line with inflation since 2015 and used to charge an average of £650 per month, to keep rental income in line with inflation, today tenants should be paying £702, which is just over £50 additional income per month.
Our Reeds Rains experts are here to advise you on a fair market rent for your property. So, to check whether you could increase rent for either a re-let or an existing tenant – and, importantly, to find out what steps you need to take to do that legally – simply enter your address here or contact your local Reeds Rains branch and one of the team will be happy to help.
Spend to earn
Unlike traditional financial investments, property does require you to inject additional capital every now and then. The good news is that spending money on improving your property tends to be reflected in either the capital value or monthly rental income - or both!.
New builds are appealing to tentants, so look at whether refurbishing your property could help attract better-off tenants who would be prepared to pay more. If your existing tenant is planning a holiday, ask them whether they would be interested in you updating the property while they’re away, in return for a small rent increase. And remember that even if you can’t immediately increase rent for your current tenant, when it comes to reletting, a property in tip-top condition will let much more quickly than a tired one, meaning you should avoid the ‘hidden loss’ of a void period.
If you let to students, particularly if you’ve done so for many years, you need to be aware of the new wave of bespoke student accommodation.
These purpose-built contemporary units tend to offer en-suite bedrooms or studios with utilities and high-speed broadband included, plus on-site amenities, such as communal areas, laundry, secure bike storage, gyms, coffee shops and 24-hour security. So if you haven’t upgraded your student house or flat recently, check what new accommodation is available or being built in your area and try to offer something comparable.
Top 5 ways to maximise student rent
- Refurbish décor and furnishings to give a clean, modern look
- Provide high-speed WiFi
- Put a smart/flatscreen TV in the communal room
- Make sure the property is secure: good locks on doors and windows, external security lighting and somewhere safe for bike storage
- If possible, create a laundry room with coin or card-operated machines.