7 ways to increase your income as a UK landlord
By Helen Jackson -
Before tax and other deductions, the average UK landlord reportedly makes £15,000 in income per year from their properties. The buy to let market is currently so strong that even having a single occupied property can generate even the most disinterested and lazy landlord a profit or a return on investment.
But if you’re looking to squeeze out as much income from your properties as possible, keep reading as we explore seven ways you can increase your income as a UK-based landlord.
#1 Invest in your properties
It’s the age-old saying, but it couldn’t be more apt in this situation — you have to spend money to make money. Investing in your properties means more than a lick of paint here and there; it’s about attracting better tenants and being able to increase the rent. A nicer place to live, with new appliances, means you can hike the rent up that little bit further.
If everything is up-to-date in your property and in good working order, you’ll find the process of letting your property out a lot quicker and easier. You may also find that your tenants are much more likely to treat your property with the respect you’ve shown for it. If your rental is in good working order, you’re also much less likely to receive complaints and calls for repairs from dissatisfied tenants.
The aim of the landlord game is not to have any empty properties, and investing in them can reduce your empty rate.
#2 Consider dividing your property up
If you own a large property and there’s adequate space for every tenant, you might want to think about dividing the property up into smaller self-contained flats or creating an additional bedroom and forgoing a second reception room.
The benefits of this are two-fold, you can provide slightly cheaper rent to entice the tenant, but multiply the rent amount, depending on how many lets you can divide it into or how many tenants you can house.
Dividing up your property will give you regular and consistent rent from multiple tenants. But remember, while making the most of your space, it is important not to compromise on quality.
#3 Get a better rate by remortgaging
Landlords are remortgaging to get a better rate and save some pennies, so you’re not alone if you’re considering doing the same. Data from UK Finance, reported by Which, found that 13,300 landlords remortgaged in December 2019.
Moving to a better rate can lower your monthly mortgage payments and reduce the size of your loan. But make sure you compare mortgage rates before settling on a lender — using a comparison site can help you sniff out the bargains much quicker and easier than if you were doing it yourself. Be aware of early repayment charges or exit fees with your existing mortgage lender — you need to work out if it’s financially sensible for you to remortgage.
#4 Get rid of your letting agent
For taking the general admin, maintenance and communication off your hands, property agents take, on average, between 8%-12% of the rental income each month.
Depending on your circumstances, you might find this service invaluable. However, if you’re looking to get this significant chunk of income back in your pocket and are willing and able to do the work, we’d recommend managing the property yourself.
It’s money right back in your pocket! You’re welcome!
#5 Retain good tenants
Vacant properties cost landlords a lot of money each year. You can reduce the risk of an empty property by prioritising finding the best tenants. This might mean managing the entire process yourself, collecting past landlord references etc. Finding a good tenant is imperative, so, if you can, don’t rush this process.
When you’ve found a good tenant, you should question whether you should increase the rent when the tenancy agreement comes to an end. Among many other reasons, tenants leave due to higher rent prices. So, if they pay on time, they respect your property, and they’re genuinely pleasant to deal with, you should consider whether increasing the rent is worth potentially souring the relationship or losing the tenant completely.
#6 Could you create an Airbnb?
Short-term lets, including Airbnb and other holiday lets, could be a good money-spinner, particularly if you live in a sought after area. Data suggests that the best cities to set up an Airbnb include Brighton, Bath, Edinburgh, Cardiff, Belfast and Manchester — with all locations, on average, generating higher income for landlords than rentals.
It’s important to realise that running a holiday let can be a bit more hands-on and therefore become more of a headache than managing a rental. You have to clean and prepare the property to welcome your next guests, communicate with guests more frequently than renters, and market and advertise your property regularly to continue attracting guests.
#7 Buy more properties
Although there’s an initial outlay financially, building a portfolio of properties can prove lucrative. This is just common sense — the more you buy, the more income you generate. But, you do have to weigh up whether you can realistically afford to invest in multiple properties and whether the outlay is financially viable.
Multiple properties mean more time spent orchestrating repair work, communicating with tenants etc. It’s important you buy one property at a time, and before you buy, understand the location and research the rental market in-depth before plunging into another buy-to-let.
If you don’t have the finances to purchase a buy-to-let property, you can consider applying for a bridging loan to quickly bridge any financial gap between purchasing and setting up a mortgage. Bridging loans are short-term in nature and can be arranged in as little as 72 hours.
Read more about the bridging loan application process.
Hopefully, this guide has given you a few ideas when it comes to increasing your income as a landlord. If you’re just starting out as a landlord and need a bit of guidance, read our guide on how to become a residential landlord.