Easy fixes to maximise your rental profits from all buy-to-let properties
Buy-to-let investment has become a little more difficult over the last 12 months, thanks mostly to the UK property tax changes made in recent years. To retain profitability, some investors are setting up limited companies to buy property in the UK. It might reduce the tax you pay on your rental income. There are many other ways to slash buy-to-let tax on your investment property, too.
More fundamentally, you could cut your costs or take other actions to increase the rent you charge. Here are 27 simple fixes to increase your rental yield and pump up the profits from your buy-to-let investment portfolio.
1. Raise the rent
Undertake a rent review, and make sure the rent you charge is commensurate with the local market, competition, and the condition of your buy-to-let property. If you are undercharging, negotiate a rent increase with your tenants.
2. Review your mortgage
Take time to sit down with your mortgage broker and review the interest rate you are paying. While interest rates are as low as they are at present, you may find a great rate to fix at – and thus cement what is probably your highest single cost for several years.
3. Invest in low maintenance properties
Investors who buy existing property as their buy-to-let investment tend to have higher and more regular maintenance costs. For your next investment, consider a new build or off-plan investment. You should benefit from lower maintenance bills and builders’ warranties.
4. Claim every tax deductible you can
Use an accountant who has specialist property investment knowledge. They will help you claim every tax deductible you can, thus reducing your tax bill. Make sure you keep receipts of all your expenses paid.
5. Rent your property furnished
Furnished property attracts higher rents, though it is best to use an investment property manager to manage your buy-to-let property. They’ll have the experience to compile comprehensive property inventories and conduct regular inspections to ensure the tenant is treating your property well.
6. Consider an HMO
A house of multiple occupation (HMO) allows you to maximise your income by renting out rooms to several different tenants. However, the HMO market is highly regulated. Get things wrong, and you could be fined as much as £20,000. Read our article, “What’s the best first-time investment? HMO v single BTL” for more information.
7. Add a bedroom
If it’s possible, adding a third bedroom to a two-bedroom property should increase the rent. You could achieve a rent increase of £50 to £100 or more per month. Before you start adding bedrooms, check the local market for rental demand and assess whether the cost of adding a bedroom will add the value you believe.
8. Decorate internally
A coat of paint inside will help to freshen up your property and make it more appealing. It’s a cost-effective way to decrease void periods and increase rental charges. The secret is to keep to neutral colour schemes: your colour preferences are likely to turn off most tenants.
9. Remove or renew carpets
If the carpets are old in your buy-to-let investment property, either renew them or remove them. Polished floorboards or laminate flooring provide a clean, sleek, luxury look to a property. New carpet has a similar effect but may not last as long. Make sure the flooring – whichever you chose – is hard-wearing to maximise life.
10. Refurbish the kitchen
Modernising a kitchen is one of the best ways to increase the value of a property. A new kitchen will probably add around 8% to the value of your property. However, it doesn’t have the same effect on rental prices. But a few simple and inexpensive adjustments could help you raise the rent. Consider replacing doorknobs, adding chrome fittings, replacing worktops, and repainting cupboard doors – this makes a big difference to appeal.
11. Install a dishwasher
A dishwasher isn’t expensive but could add as much as £10 per week to the rent – especially in buy-to-let properties aimed at young, professional tenants.
12. Lease a menu of white goods to tenants
Everyone needs white goods, but not everyone wants them. Consider setting a base rent without white goods, and make a menu of white goods for rent. These appliances include a fridge, freezer, washing machine, tumble dryer and dishwasher. Research the prices for which tenants could rent independently, and charge accordingly. Some investors who have employed this strategy have seen negative cash flow properties reach break-even overnight.
13. Update the bathroom
The bathroom is second only to the kitchen for increasing property appeal. Consider updating with a new bath panel, toilet seat and taps. Replace the shower screen, and tidy up towel racks. These refurbishments will make your property easier to rent, and demand increases rental charges.
14. Air-con or ceiling fans
Air conditioning or ceiling fans are a real seller in summer. Ceiling fans are the cheaper alternative and give that touch of luxury and livability that tenants crave.
15. New curtains or blinds
When one tenant leaves, consider professional cleaning for curtains or replacing them with new curtains or blinds. If you have opted for wooden floors, a wooden blind will give your property a more coordinated look.
16. Increase security
Make sure all windows have locks, and that upper floor windows are safe for children. You might consider installing CCTV for extra perimeter security, though the cheaper option of sensor lights works equally well as a deterrent.
17. Increase natural light in the property
If a hallway or other room is dark, think about ways to increase the natural light. Could a skylight be added, or door panels be replaced with strengthened glass? Natural light sells.
18. Create a sense of space with built-in storage
Built-in wardrobes are welcomed by tenants but can be expensive to install. A cheaper option would be wardrobes with sliding mirror doors, which can cost as little as £200 or £300. They are easy to install, add a sense of space, and help sell your buy-to-let to tenants when competition is high.
19. Spruce up doors and door furniture
If internal doors are damaged, either repair or replace. New door handles help to create a feeling that the property is well looked after.
20. Carry out those niggling maintenance jobs
Take a good look at your property. Is paintwork peeling? Are there cracks in doors, floors, or window frames? Do any of the taps drip? Are blinds, curtains and carpets clean? Whatever you see, tenants will see ten times magnified.
21. Give your property curb appeal
The first thing that potential tenants see the outside of your property, and, as the saying goes, first impressions count. Fix fence panels, paint the front door, and replace door furniture. Prune trees and mow the lawn.
22. Don’t neglect the roof and gutters
Good-looking roofs sell, and well-maintained roofs reduce maintenance costs. Clear gutters of leaves and other debris, and replace broken roof tiles.
23. Create a private outside space
People crave privacy, and so creating a private outside space if possible adds appeal. Consider high fencing or hedges that separate gardens. Where you have invested in a buy-to-let property which fronts a busy path or road, a hedge could be best – it adds privacy without the bland outlook of a fence.
24. Add a seating area outside
An area that is designed for sitting is an attractive selling point to any property. You could deck an area or block paving. You may not see your investment repaid quickly, but such an addition also adds value to the property.
25. Allow pets
Some buy-to-let investors don’t like pets in their properties, but you can charge a premium for allowing a pet. However, don’t forget that you may need to ‘pet-proof’ externally – high fences and secure gates, for example.
26. Add a private clothesline
Some apartments have communal drying areas. Providing a simple pull-out clothes line on a balcony is a cheap way of providing a little more privacy.
27. Appeal to the tenant’s lifestyle desires
Finally, think about your target tenant. What are their lifestyle desires? Are there improvements you can make or appliances you can add that will increase appeal to the lifestyle? For example, how about installing fibre optic broadband, cable television, or a coffee machine?
Doing any of these things, or a combination of several should help you to increase your rents and reduce the time it takes to get your property let. Shorter void periods increase your rental income.
Before you spend money on any major improvements, always work through your numbers. The cost of making a few minor changes could enable you to let your property at the premium end of rental prices in its area – and that could add thousands of pounds to your profits over the lifetime of your buy-to-let investment.
Contact one of the Gladfish team today on +44 (0)207 923 6100. We’re here to help you find the best property investment opportunities in the UK and to ensure your buy-to-let investment maximises its profit potential.
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