How to increase the income from your Buy to Let property
With a number of tax changes over the past couple of years and extended mandatory licensing of Houses in Multiple Occupation from 01 October 2018, it’s helpful to ensure you are protecting your monthly income and profits now and in the future.
Can you reduce your costs?
If you haven’t reviewed your expenditure recently, this is probably the first place to start to see if you can make some savings.
Mortgage payments are likely to be your biggest monthly cost, so speak to a Buy to Let mortgage adviser to find out whether you could be on a better deal. Brexit is causing some uncertainty currently, so it might be worth talking to an adviser about the pros and cons of the latest fixed-rate deals. This should give you some certainty for the next few years and protect you against any Bank of England base rate rises. Contact our expert mortgage advisers for a free, no-obligation review.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
This firm 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.
If you’re a House in Multiple Occupation landlord, are you with the most cost-effective utility providers? Generally, using a single supplier for all your utilities keeps your costs low and makes administration much easier, with everything on one bill.
If you’ve got a few properties and use different local contractors for cleaning, gardening and other maintenance, could you reduce costs by using a bigger regional or national company to provide those services? Do get in contact with your local Your Move branch as we may be able to you with this.
When did you last review your landlord insurance? If you usually let it automatically renew every year, you might not be on the best available premium, so it’s worth a review - especially if you’ve got several properties and aren’t already on a portfolio policy. Again, we might be able to help reduce your costs here, so call us on 01392 849766 or complete the enquiries form for a call back.
1. Could you increase your rent?
When was the last time you put your tenant’s rent up? If you’ve got a good, long-term tenant, you might be worried about rocking the boat, but an increase every one or two years is perfectly reasonable. Bear in mind that rent for social housing tenants has historically been increased in line with inflation.
In the year to August, inflation was 2.4%, so if your rent and costs have not changed over the last 12 months, you may have had a real-term drop in income.
For example: with inflation averaging 2.7% a year between 2015 and 2017, then 2.4% over the last year, if your tenant was paying £650 a month in August 2015, they should be paying £702 today.
Although this is an increase for the tenant, it could be possible this extra income could fund some maintenance work or even a new boiler, in which case in the long term, the tenant may actually end up reducing their overall housing costs.
Our team is always here to help you achieve 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 – contact your local branch and one of the team will be happy to help.
2. Spend to earn
Unlike traditional financial investments, you do need to invest more capital into property every now and then. The good news is that, as long as you spend that money on improving your property in the right way, you usually get it back though either and uplift in the capital value or an increase in monthly rental income - or both!
New builds can let for up to 10% more than ‘second hand’ properties, so look at whether you could attract better tenants, paying more rent, if you did some refurbishment. If your current tenant is planning a holiday, ask whether they’d be prepared to pay a bit more rent if you updated the property while they were away.
And remember that even if you can’t immediately increase rent for your current tenant, when it comes to re-letting, 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, especially if you’ve done it for for a number years, you need to be aware of the new wave of bespoke student accommodation.
These are purpose-built, contemporary units and most offer:
- en-suite bedrooms or studios
- utilities and high-speed broadband included
- nice communal areas
- on-site laundry
- secure bike storage
- 24-hour security / CCTV.
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.