Some canny forward planning and a few small improvements can really pay off when you’re looking to maximise your rental return. Here are our top tips on how to make your home pay its way and benefit your tenants…
Avoid the void
If you have your eye on maximising your earnings, there’s no doubt that employing a shorter, fixed-term contract can be more lucrative in areas of strong rental demand like London. After all, a six-month term lets you react more quickly to rent increases and command the most up-to-date market value. However, bear in mind that with increased churn comes a greater risk of voids – periods when your property is empty, no rent is being collected and you’ll need to cover overheads like the mortgage, utility bills and council tax.
Longer-term tenancies reduce the risk of vacant periods, can be more appealing to tenants and rent increases can be included in the tenancy agreement. It’s worth seeking advice from KFH’s lettings division, who can help you re-market your property as well as plan for void periods.
A new lease of life
Maintenance is key when it comes to increasing a rental property’s appeal. Furthermore, a few changes upfront will prove less expensive in the long run and prevent bigger issues cropping up.
‘Keeping on top of your investment is paramount, because it is just that, an investment,’ says Carol Pawsey, KFH Group Lettings Director. ‘You should always reserve some funds to maintain your property. When a problem arises, first assess if it is your sole responsibility or perhaps part of the service charge, or freeholder’s responsibility. Resolve maintenance issues quickly to avoid loss of rental income or reduced rent. Also, ensure that you don’t invalidate your insurance by ignoring ongoing damage such as damp. Regular inspections help to spot issues early.’
Use your time between tenants positively to catch up on essential maintenance and repair work and, ultimately, doing all you can to create a good first impression with potential renters. ‘Ensure that all windows and doors function properly,’ says Natalie Brownsmead, KFH Head of Lettings Management. ‘Tenants are impressed by good security, so functioning alarm systems are a bonus, while deadlocks conforming to standards required by insurers are a must.’
A thorough clean is a must too. Make sure the kitchen and bathrooms are free from grime, re-seal or re-grout if necessary, and clean windows. Do all the snagging jobs before viewings commence. ‘There’s no doubt about it, well-maintained properties are more marketable,’ says Pawsey. ‘They let quickly, reducing void periods, achieving better prices and attracting respectful tenants.’
Do your sums
Void periods and wear and tear are part and parcel of letting a property, so have a contingency fund set aside to not only make improvements, but to cover your overheads too. The National Landlords Association recommends budgeting for 10 months’ rent in any 12-month period.
‘The key is to go into such transactions after plenty of research on an area and its rental levels,’ says Pawsey, ‘and ensure you include all costs, not just mortgage interest but maintenance fees and void periods etc. Investing for the medium to long term – five to ten years plus – is still an attractive option based on likely capital growth.’