Six tips to increase rental profits
1. Reduce admin costs to increase rental incomeShop around to find estate agents who offer landlords fixed-fee payment options. Online agents — like easyProperty — are often cheaper and free from tie-ins. They charge a lot less than the standard 10–17% of your rental income to let and manage your property. If you move away from traditional models, you can beat the mortgage tax relief changes and keep more money in your pocket.
Want to lower your fees?Look at our low fixed-fee packs and see how much you could save.
2. Avoid an empty property
An empty rental costs money. Find good tenants and aim for long-term lets to keep void periods down. If it’s a short let, reduce turnaround time by getting ready to remarket your rental as quickly as possible.
3. Inspect the property now and thenIt’s a good idea to inspect your property during a tenancy. Checking its condition lets you spot any damages early, so you can make repairs before they become a major problem. You’ll keep more of your rental income this way. Since the mortgage tax relief changes will make it harder to turn a profit, it’s important to reduce any costs caused by damage. Most tenants look after properties, but sometimes accidents happen. For this reason, it’s vital to have an inventory check in and check out. This makes sure everything is accounted for, and lets you recover funds from the deposit for any damage.
Need a property inspection?Have a professional, APIP-certified inventory clerk inspect your rental, and get an independent report detailing the outcome.
4. Review your rentYou can review your rent by booking a valuation with a letting agent. Also, check Rightmove and Zoopla to see how much similar properties in the area let for. This allows you to set a competitive price. Charging too much rent — or too little — can be a problem. Potential tenants pass by properties that are too expensive, but if you undercharge you miss out on a fair rental income. Once the contract’s signed, it’s hard to increase rent. It’s best to have a rent review clause in your agreement, which lets you increase rent in line with inflation once a year. There’s been a lot of speculation that changes in mortgage tax relief will see landlords increasing rent. Before you do, it’s best to weigh up the odds. If raising the rent means your well-behaved tenants move out, will the extra rent offset against potential void periods? For example, a £100 per month increase will fetch an extra £1,200 each year. But if you end up with a month’s void period, how long will it take to recuperate the loss? And that’s without the costs involved in reletting the property.
5. Organise taxesLandlords can reduce the amount of tax paid on rental income by claiming allowable expenses. But it’s vital that you keep all your paperwork (including receipts) to justify your claim. The type of let affects how much you can claim. With mortgage tax relief being reduced, it’s best to check Government websites to make sure you get back all you can. Or read our guide — ‘What expenses can you claim on buy-to-let property?’ — to find out more.
6. Keep up to dateLetting legals change often. It’s vital you keep up to date to let your property legally and stay protected. A fine for lack of compliance can hinder your chances of beating the mortgage tax relief changes. Regularly checking Government websites means you’ll know about any changes you need to implement. Landlord mailing lists and blogs — like easyProperty’s — also keep you informed of any new legal regulations.
There you have it: six tips to help you beat the mortgage tax relief changes. Rent smart, and you’ll easily recover any loss made due to changes in mortgage tax relief. What’s not to like about that?
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