As we ease into 2023, we can expect the financial pinch from the cost of living crisis to continue reigning hell on landlords and tenants across the UK. Inflation remains high and is expected to rise further, much to the worry of landlords and struggling tenants trying to get by.
With the number of difficulties landlords faced before the financial crisis, many are now looking to sell their rental properties simply because they cannot afford to run them into a profit.
The current economic climate constantly evolves, and we must honestly predict whether the rental market will improve. However, if you are a landlord who is under pressure, we recommend that you follow the practical steps in this article to ensure that you can take control of your finances and create new contingencies to future-proof yourself.
It is possible to profit from rental properties as there is still such a high demand for rental properties in a market with a low supply. If you want to keep your head above water and implement better strategies to deal with the cost increases, take a look at the following suggestions:
1. Conduct Regular Inspections
By conducting regular inspections of your property, you can identify potential maintenance and repair issues early on. By addressing these issues promptly, you can prevent them from turning into costly problems down the road. It could be the difference between paying a minimal fee for regular maintenance or splashing thousands of pounds on a new boiler.
We also recommend that you have reliable contractors to hand, preferably with plumbing, electrical or handyman skills, who can do it all.
2. Consider Property Management Services
Property management companies can help you to keep up with tenant activity, maintenance and repair issues — especially if this is your part-time hustle. The property management services cover routine maintenance and repairs and handle tenant issues, including rent collection.
While this will add to your expenses, it may be a worthwhile investment as it allows you to focus on other aspects of your life and business, such as adding value to other properties to attract more tenants.
3. Shop Around For Insurance
Property insurance is an essential expense for landlords, but it doesn’t have to break the bank. Doing your market research for the best insurance can help you find the best coverage at the lowest price. Be sure to compare policies from multiple providers and read the fine print to ensure you get the coverage you need.
4. Negotiate With Service Providers
There is an energy crisis in the UK, and landlords who include the cost of energy and utilities have felt the bite of these massive price hikes. At the moment, there needs to be more assistance from the government to help regulate utility costs; therefore, you should be proactive when dealing with service providers.
It would be best if you weren’t afraid to barter with service providers for utilities, internet and other services for your rental property for better rates, as many service providers will offer discounts to long-term customers or customers who bundle services.
5. Consider Increasing Rent
Increasing rent is a touchy subject, and all great landlords know that rents should only be grown under market value for long-term and reliable tenants. If your expenses continue to rise, consider increasing the rent on your properties to cover your costs.
While this can be a difficult decision, it may be necessary to keep your business profitable. Research rental rates in your area and notify your tenants before making any changes.
The possible negative to increasing your rent too high is that it may differ any potential tenant from renting with you, so it is essential that you keep your rental prices competitive to your local area.
6. Consider Renting Out Extra Space
If you have extra space on your property, such as a garage or storage unit, consider renting it out to generate additional income.
If you have an HMO (house in multiple occupations) licence, and any extra rooms meet the requirements to be rented out as another room, you may benefit from having multiple tenants in one property.
This will provide you with extra income as multiple tenants will pay rent per room instead of an individual tenant or family renting per building. This can offset some of your expenses and make it easier to cover the cost of maintaining your property.
7. Take Advantage Of Tax
You may be eligible for certain tax returns to help reduce your expenses. As a landlord may be able to deduct the following expenses from your rental property taxes:
- Mortgage interest.
- Property taxes.
- Ground rents and service charges.
Work with a tax professional to ensure you take advantage of all available deductions.
8. Consider Serviced Accommodation
Serviced accommodation through platforms like Airbnb and Booking.com can be great ways to generate additional income during the peak seasons, especially if the property is in a significant city or seaside or has unique features.
Holiday rentals can be highly lucrative with the right property and location—research local laws and regulations before listing your property on these platforms.
9. Be Proactive
The best way to deal with cost increases is to be proactive, which can be done simply by keeping a close eye on your expenses and making any adjustments if needed.
Although you should create a budget for furnishing your properties, you should keep a close eye on spending only a little. By keeping an eye on your furnishing budgets and not spending too much on cushion sets, you could save a lot of excessive expenses.
Regular communication with your tenants can help ensure they are happy with the property and promptly address any issues with the property. By staying on top of your business, you can avoid costly surprises and keep things running smoothly even when there is a dip in the economic climate.
The cost of living crisis is affecting everyone, landlord or not; staying proactive and on top of your business running’s will put you in better stead to deal with any financial issues. Planning and planning for all contingencies is critical to keeping your business afloat, so long as you have a streamlined service even when your budget is tight.
Amy Jones is a freelance writer and an aspiring property investor. She loves learning about new property strategies and looking at home refurbishment projects. She aims to buy her own home in the next year and begin her very own renovation project!