For buy to let owners, the 2022 mini-budget and subsequent ‘mortgage meltdown' was not welcome news. Sharp increases in mortgage rates left many owners of buy to let properties concerned that their dependable investment could turn into an unaffordable burden. With many buy to let landlords facing the prospect of being out of pocket, or worse having to sell, we offer our top tips for managing your buy to let and maximising your returns.
1. Think about your property’s audience
To ensure top returns, think about what your property is, where it is and who’s going to pay the most money for it. Then spec it out accordingly. For example, a one bed in Weybridge is ideal for a commuter looking for a comfortable base to travel to London from, so kit it out with a desk, speedy wifi and a coffee machine. A local family looking for a home in Richmond is going to want extra space for the kids, good quality fixtures and a comfortable home from home. At Smarter Rent, we use a 107 point checklist and kit each of our properties out with 120 items to make sure it's rent-ready. Renters get a home from home and are happy to pay a premium for the convenience.
2. Avoid seasonal highs and lows
One way to guarantee a higher income is short lets. But these take a huge amount of management and rental income varies wildly between peak months and the summer and Christmas lulls. There is a happy medium with 6–12-month rentals - long enough to attract good quality tenants, short enough to charge that bit more - however, landlords need to be savvy. When does the property become vacant? Do you have gaps over Christmas? Flexible contracts and timing the end of deals can avoid your property sitting empty. Some agents such as Smarter Rent will also guarantee rental income at a fixed amount for additional peace of mind.
3. Create a killer listing
Where your property appears online and how it looks is paramount. Rightmove, the UK’s largest online portal, is the obvious choice, but it’s also where your competition will be. Independent agents can market across hundreds of websites. If you have a garden and are happy to accept pets, you will open yourself up to an even bigger market. In fact, 90% of Smarter Rent's properties are dog friendly which contributes to our unrivalled 95%+ occupancy rate.
Don’t forget, first impressions count. Professional photos play a key role in rental property listings and a good quality furniture pack will ensure your prospective tenants can imagine themselves living there.
4. Consider your tenant’s costs
The rising cost of living is subjecting tenants to a double whammy when coupled with rising rents. In a long-term rental, where the tenant is responsible for bills, making your house as efficient as possible could give your property the edge. At Smarter Rent, for example, we have set ourself a 2022 goal of reducing energy bills by 50%. This will help ease the pressure for bill payers, and will help our homeowners comply with the EPC (energy performance certificate) changes coming into force in 2025.
5. Do your tenant due diligence
We’ve all heard the horror stories about a nightmare tenant a landlord can’t evict. Reference checks are crucial to determining whether a prospective tenant is reliable and able to keep up with monthly rent payments. However, they only go so far in ascertaining a tenant’s suitability. Charging rent upfront can give additional security. And if you rent through an agency such as Smarter Rent, look for one that’s signed up to the Tenancy Deposit Scheme. You’ll have a third party responsible for holding the deposit, managing repayments and dealing with any disputes.
Interested to see this in action? Read about Neil who's earning 11% gross yield from his Smarter Rent investment.