With George Osborne's Summer Budget due to turn normal business expenses, such as mortgage interest, into taxable revenue for private buy-to-let investors from 2017, it has never been more crucial for landlords to be smart with the money that goes into their property business.
Being a landlord is a great opportunity to earn a supplementary or replacement income, especially in retirement. But before you enter the market, you need to be fully aware what maintaining a buy-to-let property portfolio entails in terms of ongoing investment.
Whether you're just starting out or an experienced landlord, there's a good chance you've forgotten some of the best ways to save money on maintenance, tenant management and general marketing.
Here are some tips to help ensure your business expenses are kept to a minimum while your properties continue to serve their purpose - providing comfortable and well-maintained homes at reasonable rents and giving you a profit in return.
Stay in sight of your spending
First of all, you need to find out what you are actually spending on your rental properties. If your rental property is costing more and more to maintain or you're not seeing as much of a profit as you were, it's time for a review. You can't begin to chase savings if you don't know for sure where the money is going. Take a look at your rental income and then evaluate everything you invest back in the property and tenant experience from that income. Break it down into bills, general maintenance and emergency repair and you'll soon see where you need to start recouping some of that expense.
Avoid décor disasters
It may seem dull, but stick to neutral colours throughout to invite prospective tenants to visualise themselves there. Choose high quality paints as they will need less maintenance and fit doorstops on every door to avoid damaging the paint with the handles. Go for the same carpet or wood flooring throughout as it is cheaper to buy in bulk and keep large remnants for future patch-ups. Fit kitchen work surfaces in sections so you don't have to replace the whole thing and choose a standard size and colour for easier replacement - the same goes for tiles.
Blitz those bills
It's bad enough tackling your own household bills but if your rental bills are giving you a bigger headache, it's time to barter. Take time to work through your utility bills (if they are your responsibility), insurance details and mortgage products. There could be better deals available, and discounts if you have more than one product with the same supplier for example. Simply asking for a discount could get you results so it's worth a try.
Smarter maintenance
Stay on top of those odd jobs that can spiral in cost if not tackled early enough. From blocked gutters to leaking taps and damp damage, add these to your routine maintenance schedule and address them in good time. Also log the warranty periods of all appliances, fixtures, fittings and repair work and make sure you make a claim if something breaks within this period. Don't rely on your tenants to give you enough warning or to budget for repairs. And shop around for the best value tradespeople to find reliable professionals in your area who you can rely on to do the best work for the best price.
Cut the cost of advertising
Consider marketing your property yourself and save hundreds of pounds through an online letting agent. You will be responsible for viewings but this could be a positive thing as you will be able to meet prospective tenants in person from the off. Or you could try social media - advertising your property on Gumtree orSpareRoom.co.uk. If you decide on a high street agent, remember they need your business, so you're in a good position to negotiate. Shop around for the best deal and consider whether you want them to provide more expensive property management services or simply find your next tenant.
Avoid the voids
The single most damaging thing for a landlord's rental income is to have a period where the property is empty. There are some policies you can take out to insure against them and some agents offer guaranteed rent deals - for a price. Whilst there are strategies to minimise void periods, such as providing quality accommodation and a good service, they can't always be planned for. So make sure you ask tenants for at least one month's notice and get their permission to do viewings before they intend on moving out.
Do it yourself
Whilst some landlords would prefer a completely hands-off experience with their investment, they could actually save a huge amount of money if they took some management and maintenance responsibility on themselves. If you're a dab hand at painting, do you need to hire that decorator? Were you a plumber in a previous life and more than capable of fixing the sink? Do you enjoy catching up with your tenants on a regular basis? Then why not do the quarterly checks yourself? Are you a mathematics expert with an eye for detail? Time to file those accounts.
On the other hand, doing half a job when you lack the skills could also cost you money, so make these decisions wisely. And ultimately, it comes down to the monetary value you put on your own time.
***
In terms of finances, there are a lot of things to consider regardless of your length of experience as a landlord. By taking the time to periodically take stock of your investment, you can ensure you're not paying more for something than you should be, or even paying for something that you no longer need to.
But remember, there's a difference between being smart with your money and scrimping on what you spend at the expense of the tenant. After all, the biggest saving you can make is having a loyal and long-standing tenant.
