With so many Government measures designed to crack down on buy-to-let, there’s been no better time for investors to take steps to protect their profits. These tips for landlords will help you boost your returns.
As of 1st April, buy-to-let landlords and second homebuyers face an extra 3% in Stamp Duty when purchasing an additional property. On the same date, the Wear and Tear Allowance was abolished for investors.
On top of this, landlords will also face a reduction in mortgage interest tax relief from April next year. The change could see investors making losses on their lettings businesses.
Follow these tips to ensure your profits are protected throughout these changes:
- Review your current property portfolio and see if you could make improvements to any of your rental homes that will increase its value – such as an extension or a new kitchen – and therefore boost your rental income.
- If you have a one-bedroom property, you could potentially convert it into a small two-bedroom unit to push up the rent you charge.
- Consider converting a property into a House in Multiple Occupation (HMO), which will again increase your rental income.
- As there is a severe shortage of homes for sale at the moment, prices are at a record high, meaning it is a good time to sell a property. If you have any assets that aren’t making you money, it may be wise to put them up for sale.
- As the forthcoming change to mortgage interest tax relief doesn’t affect limited companies, you could look into changing the way you operate your business. Using this structure may benefit you.
- If you are thinking of purchasing more properties to expand your portfolio, it is vital that you look in the right places and find an area with a steady rental market. Tenant demand is especially high in certain locations, so invest wisely.
- While you may think that adding more properties to your portfolio may boost your profits, the best place to start is with the assets you already have. Review the rent price you charge on each property to ensure that you aren’t missing out on income by undercharging your tenants.
- While you may have reliable tenants at the moment, anyone can find themselves in financial difficulty at some point. Make sure you protect your rental income with Rent Guarantee Insurance, which ensures you still get paid if your tenant defaults on the rent.