By Kate Faulkner
With a general slowdown in the property market, many buy-to-let landlords are looking instead to see how they can increase the profitability of their current property portfolios.
The key to maximising the rental value of properties is understanding how to attract tenants who will pay the most or finding a way to get more rent from property.
One of the first things landlords need to understand is the type of tenants who would be attracted to their type of property and location.
If it is in the vicinity of a college or university, properties may be suitable for students. There may already be plenty of properties for undergraduates, but overseas students – who are generally wealthier – post-graduates and even lecturers may be happy to pay more for a well-maintained home.
Whichever tenant type will maximise the rent for property in a given area, the likelihood is the most rent will be achieved by making sure it is in excellent condition. For example, the rent on a new-build will tend to be at least 10pc more than on an existing home.
Here are six ways of maximising rental income:
1. A new paint job and clean-up
These days, tenants tend to stay in a property for around two years, so they are not looking for temporary accommodation as they may have been in the past, but for a home they can call their own.
According to the Government’s English Housing Survey 2014/5, 30pc of privately rented properties are not considered “decent”. As such, one of the cheapest ways to raise rental income is for landlords to make sure their properties are well maintained, easy to heat, have no damp or condensation issues, and are given a good clean and a lick of paint.
2. Upgrade kitchens and bathrooms
Replacing a tired and out-of-date kitchen and bathroom can not only have an impact on rents but can encourage the tenant to stay longer, reducing re-letting costs and potential void periods in between lets.
3. Add en suites
Modern student halls often have en suites, but not all rental properties do. So, if it is possible to add private facilities – especially for landlords who are renting rooms – it is worth doing so as this may attract wealthier tenants who are willing to pay extra for the facilities.
4. Can you extend?
If renting rooms is not an option, such as where the property is not large enough, it may be possible to add extra space to create more rooms to rent. Alternatively a landlord may have a two-bed property of a type that is oversupplied in an area where tenants are desperate for three-bed properties.
An easy-to-add single extension may not just boost rental income, but should also raise the overall property value, boosting overall returns. Any such changes will of course require that landlords secure any required planning permission and ensure it passes building control.
5. Target specialised rental markets
Some properties may be suited to tenants who can pay more, such as a home that incorporates a 'granny annexe' for multi-generational living. However landlords look to improve their rental income, it is important that they talk to local property experts to check the implications of renting to different tenant types and the increased rental income will cover any rise in letting costs.
6. Offer ‘added extras’
Many people consider that tenants are renting because they are on a budget, however, in some areas, renting can actually be cheaper than buying.
If as a landlord you have access to a premium tenant market, it may be possible to secure more rent by providing a higher than average spec property with state of the art appliances, décor and security systems. Do check this investment will deliver enough additional rent to cover the higher costs and that premium tenants will rent your property type in the area it’s located.
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