The Ministry of Housing has shown that landlords are offloading 3.800 buy-to-let properties a month, following the UK’s sweeping tax and regulatory reforms, meaning the competition for good rental properties amongst tenants has intensified over time. Now, instead of adding to their property portfolios, many landlords are exploring the option of increasing the profitability of their outstanding rental properties, whilst also working to boost tenant attraction and retention by improving the quality and specification of their properties.
If you are considering joining these landlords on their quest to maximise the rental value of their properties, you’ll need to know that the key to boosting value is understanding how to attract tenants who will pay the most or finding a way to get more rent from a 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, several properties could 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 circa 10 per cent more than on an older property.
Take a look at these ideas on how best to increase the value of your rental property:
1. Freshen up with a good clean and a lick of paint
The average tenancy length is now around two years, so tenants aren’t just looking for temporary accommodation. They are now looking more for a home they can call their own. Therefore, one of the cheapest ways to raise rental income is to make sure your properties are well maintained, easy to heat, have no damp or condensation issues and are given a good clean and lick of paint.
2. Upgrade kitchens and bathrooms to more modern suites
Replacing a tired and out-of-date kitchen and/or bathroom can not only have an impact on rental income, but can encourage the tenant to stay longer, reducing re-letting costs and potential void periods in between tenancies. Not to mention, sleek and modern rooms will also add to the overall value of your home, with financial reward often seen upon the eventual sale of the property.
3. Explore the idea of adding an en-suite
Modern student halls often have en-suites, but not all rental properties do. So, if it’s 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 privilege.
4. Can you extend?
If renting rooms separately is not an option, such as where the property simply 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, increasing overall returns. Any such changes will, of course, require the landlord to secure any required planning permission from local authorities.
5. Target specialised or niche rental markets
Some properties may be suited to tenants who can (and choose to) pay more, such as a home that incorporates a ‘granny annexe’ for multi-generational living. However, for landlords looking to improve their rental income, it is important that they talk to local property experts to check the implications of renting to different types and the increased rental income will cover any rise in letting costs.
6. Offer ‘additional extras’
Many people assume that tenants are renting because they are on a budget and/or cannot afford to purchase a property of their own. However, in some cases, renting can be a much more expensive option that buying, and tenants rent simply because they like the flexibility.
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, though.