Becoming a landlord can be a great way to make money and invest for the future – but it can be an expensive business if you get it wrong. We have ten top money saving tips to help landlords boost their rental profits:
- Upgrade your mortgage
Mortgage payments will likely be your biggest expense as a landlord, so it is vital to ensure you’re getting the best deal. Although you may have secured a good deal to begin with, it is always worth looking at remortgaging, as there are now more record low mortgage rates than ever before.
- Find a trusted tradesperson
Finding a decent tradesperson that doesn’t cost the earth can be a huge problem for landlords. If you do find a reliable maintenance person that charges you a fair fee, don’t let them go; you don’t want to end up spending all of your rental income on someone that’s ripping you off.
- Combine annual tests
By law, private landlords are required to have an annual gas safety check by a Gas Safe registered engineer. It is also best practice to have all electrical appliances PAT tested. If you are able to, finding an engineer that does both can save you money. London estate agent Portico offers a combined annual test for just £95 – even if you’re not a client.
- Get your taxes in order
Are you getting the most out of allowable tax deductions? Many landlords do not take advantage of the deductions available to them. The Government has released a new online tax tutorial for landlords to help them get their taxes in order. Every penny claimed as an expense reduces profits, which means a lower tax bill. It is advised that you save all of your receipts – deductible costs cover a range of items, from letting agent fees to property repairs.
- Watch out for condensation and mould
Condensation and mould are extremely common issues in rental properties, particularly during winter. Unfortunately, most tenants ignore the early signs of problems and the issue escalates into mould. You should highlight potential problems when a tenant first moves in and on your periodic inspection visits.
Ask your tenants to take the following preventative measures:
- Cover pans when cooking to prevent moisture, or make sure the window is open.
- Ventilate the property by opening windows and doors whenever possible.
- Do not squash furniture items against the walls, as this obstructs air circulation.
You may also want to invest in a humidistat extractor fan, which stays on after your tenant has turned off the light in the bathroom to reduce moisture and only costs around £30.
- Invest in a letting agent
If you don’t live near your rental property and choose not to use a letting agent, you are relying on your tenants to notify you every time there’s a maintenance issue. Although this can work for some people, if your tenants aren’t very diligent, you may discover a host of maintenance problems at the end of the tenancy, which could have been prevented. You could also end up spending hours travelling between properties. Investing in a letting agent will give you peace of mind and ensure that all of your duties are carried out.
- Don’t overspend on furnishings
If you’re offering a furnished property to let, it can be easy to overspend on unnecessary items. While a tenant may not be in your property for the long-term, they will still want it to feel like home, so it’s important to strip everything back and allow them to personalise the space. Stick to neutral colours and basic items to create a property that any tenant would want.
- Protect against rent arrears
No landlord wants to deal with late rent payments, or even tenants that refuse to pay the rent, so protect your rental income with Rent Guarantee Insurance, which ensures you still get paid if your tenant defaults on the rent. Our policy will also cover your legal expenses if you are forced to evict a tenant.
- Avoid void periods
Many landlords’ greatest fear is void periods – when your property is empty in between tenants. The average void period lasts 28 days, so it is worth investing in Unoccupied Property Insurance to look after your investment while it is empty. We also have some top tips for landlords that want to keep their tenants for longer: https://www.justlandlords.co.uk/news/4-tips-landlords-looking-keep-tenants/
- Make sure you have an inventory
An inventory is an important document for all landlords to have, as it details the condition and contents of the property before and after a tenant moves in. The check-in inventory should thoroughly describe the standard of the property before the tenant moves in, so that they know exactly how to return it at the end. Making sure you have evidence of how the property was at the start will avoid you needing to pay for any damage caused by the tenant at the end.