Professional landlords have had a rough ride over the past 18 months. With less money floating around and more demanding tenants it pays to find cheaper ways to make upgrades to your buy-to-let.
The property slump provided mixed news for property investors; while some landlords benefited from increased demand for rental properties and low interest rates, others struggled to service their [buy-to-let mortgages and keep their portfolio in good order at a low cost.
As the mortgage market begins to ease, competition among landlords is increasing again. And while many people struggle with ongoing financial concerns, an increasing number of tenants are beginning to differentiate between properties on the basis of quality as well as than price. For these reasons it is vital that you consider cost efficient means by which you can improve your buy-to-let property in the eyes of potential tenants.
Perceived value is an important concept for landlords to understand; it describes the amount that your tenants believe the property to be worth, as opposed to the amount that has actually been spent on it. You can increase the rent your property will fetch by taking steps to raise its perceived value. Making cosmetic changes and fitting new appliances are often cost-effective ways of doing this.
If you think of luxury properties, you think about lots of light and space. This is therefore what you want to achieve in your own rental. Freshen up paintwork with bright neutrals and choose blinds or curtains that will let in as much light as possible. Light coloured fittings also add to this effect. Going for this look is cheap to achieve and will be easy to maintain.
Most tenants will expect to see a standard range of appliances in every property; a washing machine, fridge-freezer, oven and hobs are the minimum. Additional appliances can be used as selling points for the property. Very few budget or mid-range offerings will include a dishwasher, for example. The increase in rent that this appliance will command is likely to be significantly larger than its cost over the course of a couple of years.
Remember that you can often write off the depreciation that these assets will suffer against tax – making them even cheaper over time.
Wood flooring is also seen by tenants as a high-value addition to a property. Consider pulling up the carpet – but replacing it not with real wood, but with a good quality laminate flooring. Laminate can often be acquired very cheaply, but will attract higher rents.
Also, as long as it is treated well, laminate flooring is significantly easier to clean than carpet so you are likely to find that you need to replace it far less frequently.
First impressions count
That old cliché really is true in the rental market: first impressions count. Many landlords plough all of their resources into the interior of their properties, completely forgetting the importance of frontage.
While it is obviously true that the bulk of your time should be spent fixing up the inside, you should always consider the importance of your property’s exterior. You can improve this incredibly easily; for example, if the property has a gate, make sure it is well oiled and properly on its hinges. If it has a front garden, make sure that it is neat and presentable.
In some instances it may be difficult to work on the frontage of your property. If it is in a block of flats, for example, you may well be unable to alter the exterior at all. In these cases, though, your tenants are less likely to care; people will instinctively place more importance in the outside appearance of a property if it is exclusively theirs, than if it is shared with a dozen other people.
Even so, first impressions still count, and the front door and hallway should be the main points of focus for flats.
Upgrade the bathroom
The bathroom is a ‘deal breaker’ for many tenants – and understandably so. While you are unlikely to be able to increase the size of your bathroom without undertaking major structural work, you can take some relatively cheap steps to improve its quality, and its perceived value.
The colour scheme is of paramount importance in a rental bathroom. Don’t be lured into bold design statements here; stick with functional white. Make sure there is enough storage space – and, above all, ensure that it is spotlessly clean for viewings.
If the bathroom is relatively old, think about ways that you can bring it up to scratch. Fitting a new shower head is often a good idea; this can often make the water flow much more powerful at very little cost. Larger showerheads often look more impressive and luxurious so it may be worth investing in just one item like this.
Smaller things to take care of include making sure that the washers on all of the taps are properly fitted in order to prevent drips, that the waterproof sealant is new around the edges of the sink and bath or shower, and that the tiles are mould free.
Finally, think about any affordable extras that you might be able to include. A towel rack fitted over the radiator, for example, may seem like a tiny addition – but it will increase the property’s perceived value.
Keep on top of it
Once you have made your improvements, keeping costs down in your buy-to-let is a long-term job. The more regularly you are able to keep on top of small issues, the less you will need to spend on an overhaul after each tenancy.
The rental market is likely to become increasingly competitive over the course of the next couple of years. You can put yourself on the front foot by taking a few simple steps to increase the value of your property in the eyes of potential tenants. Don’t be fooled into thinking tenants will settle for second-best; increasingly, they will not. Spend a bit of money and a bit of time now, and you are likely to see your rental income increase, or at the very least, attract many more and better quality tenants.