“Look after the pennies, and the pounds will look after themselves.”
It might be an old saying, but keeping a keen eye on the day-to-day finances of your rental property can pay huge dividends. But we’re not talking about being cheap.
From buying a new fridge to replacing a shower head or even choosing a letting agent, going for quality will reward you with years of reliable service.
But you can also be savvy with your money around costs, income and planning for the unexpected when you put some time and thought into:
- Removing financial shocks
- Making smart repairs and replacements
- Reviewing your regular outgoings
- Increasing your income
- Claiming every allowable expense
Being on the case with all of the above can unlock thousands in extra profits to either enjoy at your leisure or reinvest in your business, so let's dive in to see what's in it for you.
REMOVE FINANCIAL SHOCKS
When something breaks down, it's usually at the worst time. Call-out charges, parts and labour are rarely cheap, but there are ways to avoid them blowing a hole in your savings, including:
- Taking out a boiler servicing and repairing policy or, if you're buying new, looking for models with long warranty periods (some manufacturers offer ten years).
- Exploring extended warranties for your kitchen appliances. You can generally cover items up to 8 years old, either straight from the retailer or through specialist insurers.
- Checking that your landlord insurance includes 24/7 emergency cover for plumbing, drains and electrical crises. Many providers offer a bolt-on to existing policies.
While you can never predict when the washing machine or heating system might fail, a few precautionary steps can help minimise the hassle and pain.
MAKE SMART REPAIRS & REPLACEMENTS
Keeping your property looking fresh and up to date will protect and improve its rental value, but before embarking on a big renovation project, look at how much work really needs doing.
From cost-cutting to sustainability, here are some typical money-saving and future-thinking examples to consider.
- The bottom half of a kitchen gets far more wear than the top, so you may only need to replace the worktops and lower doors (perhaps creating a striking two-tone look).
- Before replacing tiles, check whether simply regrouting will revitalise their appearance. As well as saving time and money, you’ll reduce disruption and waste.
- If you’re redecorating, invest in high-quality washable paint for a longer-lasting finish, and pick a timeless warm white or light grey that shows fewer marks.
Finally, before you make any improvements or repairs, check for government funding schemes. For example, the Air Source Heat Pump grant pays up to £7,500 towards the installation cost.
REVIEW YOUR REGULAR EXPENSES
Whether it's your mortgage, insurance or utility bills, switching to better deals whenever you can will save you thousands of pounds over the lifetime of your investment.
Those savings can go towards upgrades that add more value to your rental property, so keep a watchful eye on the following costs.
- Refixing your mortgage rate offers long-term stability, but look out for high arrangement fees. For lower loan-to-value deals, you can find lenders who charge nothing.
- Buildings insurance has shot up, so shop around before renewing your policy. You could even check your current provider’s rates for new clients in case there’s a cheaper deal.
- If you own an HMO, review your utilities annually for the cheapest provider that year. You can also minimise your water bill by fitting flow restrictors to all taps and toilets.
Most research can be done online, but it's worth chatting with an independent broker for mortgages and insurance as they may have access to better deals than comparison sites.
INCREASE YOUR INCOME
Cutting costs isn't the only way to boost your profits, and there are multiple ways to increase a property’s rental value, including:
- Reviewing the rent annually to keep in line with the market while offering loyalty discounts to excellent long-term tenants to minimise changeovers and void periods.
- Exploring ways to add more bedrooms, from converting a loft or garage, to creating space by combining a kitchen and living room, or even building an extension.
- Going upmarket with specification upgrades and luxury finishes, or injecting interior design touches to elevate the experience of light, function and style.
Many rental properties never reach their full potential, so if you're wondering whether yours has extra possibilities, give us a call on 03338 802 602 for a quick exploratory chat.
CLAIM EVERY ALLOWABLE EXPENSE
Minimising your tax bill is an essential part of boosting your profit. From knowing what you can claim to keeping receipts for even the smallest expense, it all adds up!
- Check the HMRC website for allowable expenses to ensure you're up to date with what you can claim, including whether you qualify for the £1,000 Property Allowance.
- Take photos of every receipt with your phone and create a dedicated album so they're all in one place for when you do your tax return - no more scraps of paper!
- Remember to include the costs of running your business from home, as there are allowances for broadband, electricity, office space, phone calls, and printing.
Our Landlord Tax Tips blog goes into much more detail, so why not take a look to see if you've missed anything you can claim.
Could you boost your buy-to-let profits?
Everything we do is about making your life as a landlord more enjoyable and getting your property to its maximum income level.
Call us on 03338 802 602 or message us at enquire@three2six.co.uk to chat with our team about buy-to-let in Birmingham, and to explore the full potential of your investment.
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