How to Increase Income from Your Rental Property
It will not be news to many with investments in the property market that profit margins are slimming – and in danger of slimming much further, too. A unique catalogue of errors has complicated the rental markets financial climate and frustrated the property market significantly too. As someone with a rental property or portfolio of properties, you might have concerns for the profitability of your own rental efforts; what can you do to increase rental income from your properties?
Financial Concerns
The combined impacts of the coronavirus pandemic and inflation crisis have had deleterious impacts for household budgets, reducing available income for millions and precipitating several near-recessions. Meanwhile, for example, record property value growth in the UK was followed by Bank of England reactions to that same inflation crisis, resulting in highly-valued properties and incredible hikes to mortgage rates. Not only were new buyers priced out of the market, but existing mortgage-holders saw their property expenses expand unsustainably.
For a key majority of landlords in the UK, mortgage interest is the only contribution made towards homeownership; buy-to-let mortgages allow landlords to acquire property without being liable for the upfront value until the end of the mortgage. In principle, this was to incentivise home-buying and lower the threshold for new landlords. In practice, rising rates of interest have made it harder for some to turn a profit. Some who had not structured their landlord business correctly were even forced to sell.
With rentals bringing in less money, it behoves you as a landlord to chart a course to profitability – without unnecessarily bringing hardship to your renters. What follow are some simple and effective ways you can achieve just that.
Extension
Extending your home through adding bedrooms enables you to charge an additional per-person rent, which is useful in university cities where student lets are lucrative. Extending your property is also a viable way to add value to it, which can be powerful for your long-term portfolio position.
Renovation
Renovation is a much more accessible route to improving your prospects, being less expensive than extending outwards. The right renovations can help you command a higher monthly rent without doing so unreasonably, and also improve your chances against other landlords in your area. Bathrooms are a common point of contention for new renters; looking around a bathroom showroom for bathroom inspiration can give you some ideas for how to entice renters in at a more premium price point.
Optional Extras
If you have some form of structure or team behind your rental business, there may be some extras you can offer to plump up your rental income, and generate a small amount of additional profit. Bills-inclusive rentals have become more popular amongst students and young adults in recent years, where utilities and internet are handled and paid by the landlord in exchange for a higher monthly rent.
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