Landlords: How To Increase Rental Fees Without Losing Tenants
7th March 2019 posted in Landlords
All landlords should look to maximise their rental return but they also need to ensure they keep their tenants happy. If tenants believe that the rent is too high, they will leave or avoid the property in the first place. Landlords have to focus on offering value if they want to increase rental fees without losing tenants, and there are many ways to achieve this.
With respect to the current asking rent in Forest Hill, the following table details these figures for property sizes in the area.
When it comes to rental income, it is natural that landlords will consider rental yields and the expected return on investment for an area.
According to figures provided by rentalyield.co.uk, the following table details the current expected rental yields for the SE23 postcode area:
It would be fair to say that these figures won’t get many investors heart's racing. Depending on an investors' aims, they may have an interest in one or two-bedroom properties in the local area. However, these figures are definitely on the lower side for what would be expected.
The fact that expected rental yields tail off as property size increases, which is more explicitly seen in the image below, isn’t a concern. The price paid for property has a large impact on expected rental yield and it makes sense that the higher the fee paid for the property, the smaller the expected rental yield is likely to be.
It would be fair to say many investors would abandon their plans to invest in Forest Hill and the SE23 postcode on these figures, but it is important to note these figures aren’t set in stone and it is possible to improve the return you receive when investing in property.
While the information from a site like rentalyield.co.uk is interesting and a very good starting point for researching an area, there are many ways that an investor or landlord can improve on their return. At Hunters Forest Hill, we can help property buyers find better value for money purchases, and we can help investors and landlords improve on their rental yield.
Review your expenditure and outgoings
A sensible way to improve your rental yield and rental income which is sometimes overlooked is to review your expenditure. If you are able to reduce your outgoings without compromising on the quality of the service you offer, you improve your rental yield.
It is perhaps natural to initially focus on improving your home or landlord service but turning your attention to your outgoings before you make changes to your services could be of benefit.
Consider the needs of your tenants
If you are going to make improvements to the property, it is worth considering what tenants want. Some landlords and investors make improvements based on their own tastes or what they would like to see if they lived in the property. The problem with this is if your most likely tenants have different expectations or needs, you are not making improvements that will appeal to your likely tenants.
A study by GoCompare spoke with 1,000 tenants about what they looked for in rental accommodation. The following table highlights some of the most popular responses:
The fact that the most popular form of response was an unfurnished property was interesting. Landlords looking to appeal to the biggest number of prospective tenants will find this to be informative but it isn’t too helpful when it comes to increasing rental yields.
By not furnishing a property, a landlord doesn’t have to buy property, which lowers their expenses. In the short-term, this is helpful in strengthening the return a landlord receives from their property but in the long-term, investment in property can often help a landlord receive a greater return on their investment.
Moving on from the unfurnished response, it should be clear that there are some possible solutions for landlords looking to make improvements that will make their rental accommodation more appealing to tenants.
Convert or extend your property
Converting or extending property is a tremendous way to increase value and to justify charging a larger rental fee. If you have the time and funds to undertake home improvements, it is a sensible approach to follow.
An extra bedroom is often the natural way to improve a home but in the present day, offering an office or working environment may be of benefit for landlords looking to attract a certain sort of tenant.
Remote working is becoming a common feature in the workplace. If your home is set up to encourage home working, you may find it appeals to more tenants.
Returning to the results from the study undertaken by GoCompare, investing in an en-suite for an existing bedroom or creating a terrace in the garden may also help to make a property more attractive to tenants.
Offer additional services
While many landlords are wary of how much they can increase rent by in the present day, there is an argument for increasing rent if you offer greater value to the tenant. There is a wide range of additional services a landlord can offer to a tenant that will hopefully not increase their expenses by much but which can allow them to generate more income.
An example of this would be offering Wi-Fi as standard in your property. If you arrange for broadband connectivity in your home, you have control over these bills and you make life easier for tenants. You don’t have to worry about tenants causing problems by not paying a company for this service or acting poorly with them. Also, if you have arranged this service, it will be available to tenants on the day they move in, which will make your property more desirable.
An additional service suggested by the study noted above could be to arrange a cleaning service for tenants. Tenants should be aware of the importance of maintaining the cleanliness and condition of the property, particularly with respect to getting their deposit back. However, many people claim they lack the time or energy to clean their home in the best manner.
As a landlord, you can offer a cleaning service to your tenants. The tenant benefits because they enjoy a clean house without any work, and they improve their chances of receiving their deposit back. As a landlord, you can be more confident about the condition of your home being maintained in an appropriate manner, so landlords and tenants can benefit from this approach.
Do you need help reaching out to or pleasing tenants?
While the demand for rental property means being a landlord is an attractive proposition for many people, it isn’t necessarily an easy position to hold. Maximising your rental income and yield can be difficult but we are pleased to say we have helped many local landlords enjoy a more significant return on their rental property.
If you are a local landlord looking for assistance or guidance, please contact Hunters Forest Hill. We have a strong track record in assisting local landlords and we look forward to helping you achieve your rental goals.