Comment: Landlord advice - How to maximise your rental income

Julie Webster, Leasing Negotiator, looks at ways of helping landlords maximise rental income.

Renting out a property is just like any other investment, it should be regularly reviewed to ensure that it is maximising potential returns for you.  

Here are five key areas to consider when assessing whether you are making the most of your rental property.

Maximising your income

Getting the maximum rental income from your rental property is the most obvious way of ensuring healthy returns. However, maximising your income does not always mean automatically increasing the rent every year, particularly if you have reliable tenants who are willing to extend their current agreement. This can also be true if the state of the local market has altered since you last let the property. This is where a letting professional’s expert knowledge of market trends is key to understanding what is achievable in terms of rental for your particular property. Their experience of the local market will ensure that you are getting the optimum return from your investment. You may be surprised at how the market has changed.

Let your property quickly

Minimising periods of unoccupancy is one of the most fundamental steps towards getting the most out of your property. Therefore when marketing your property make sure it is presented at its absolute best. Showing your rental property to the widest audience possible also greatly increases your chances of securing a speedy let. This is where a lettings specialist with a wide network can greatly improve the speed at which you let your property.

Tax Incentives

To avoid paying too much tax, you need to be aware that certain deductions are allowable when your property is being let or is available for letting. You should consult a qualified accountant or HMRC for specific advice regarding this, however as a general guideline, landlords are permitted to make certain deductions from their rental income before calculating profit. Some of the available deductions available to landlords include:

• Mortgage interest - You can use all the interest you pay on your mortgage each year to offset your tax bill. If you have an interest-only mortgage, your whole monthly repayments will be tax deductible. If your repayments are roughly equal to your net income, you will not have to pay any income tax on the property at all.
• Letting agent fees  - Letting agent's costs on your tax return are an allowable tax expense.
• Buildings and contents insurance premiums - Specialist landlord insurance will cover the building, your liability as a landlord and loss of rent. You can also typically add contents cover, home emergency, legal expenses and rent guarantee insurance.  The cost of the premiums for these can be deducted.
• Furniture wear and tear- For furniture and equipment which a landlord has provided, a 'wear and tear' allowance equivalent to 10% of the net rent can be deducted. As an alternative to the 'wear and tear' allowance, you can claim a 'renewals' allowance on certain items e.g. to buy new white goods.
• Maintenance and repairs - Any money you spend keeping the property in a good state of repair is tax deductible. While you cannot claim for renovations, extensions or improvements that add value to the property, you can offset expenses for wear and tear. Property repairs can include mending broken windows and doors, repairing white goods, furniture, guttering, painting, decorating and replacing or fixing the roof for example.

Upgrade and redecorate

Some landlords are reluctant to spend money on redecoration, but remember that as well as an increase in the rent, the value of your property will also increase meaning your income and the value of your assets will rise together. Bathrooms and kitchens make the biggest impression on potential tenants so should be top of the list for renovation. Simple improvements can often greatly increase your chances of securing a tenant quickly.

Protecting your investment

Disputes over damage/unacceptable wear and tear to properties at the end of rental agreements can lead to an erosion of the value you have created over the term of a rental. Landlords are recommended to protect themselves from any such disputes by preparing a professionally drawn up inventory. Using inventory agents accredited by the Association of Professional Inventory Providers (APIP), who follow the APIP strict code of practice, is an excellent way of minimising the scope for dispute.

Conclusion

Your property investments can bring much higher returns when you consider these points and have a knowledgeable, pro-active agent on your side. Expert advice and assistance at every step of your investment is vital- finding the ideal investment property, managing rental for you, and controlling costs and maximising your return.