Over the last couple of years we have seen a significant increase in the tax liabilities and the regulatory liabilities of private landlords. We have seen a reduction in mortgage interest relief (which will eventually be withdrawn) and legal obligations to ensure property is fit for human habitation, etc. Even though many of the obligations introduced by the government were already in common practice, the involvement of the authorities as added a further layer of cost. So, how can private landlords reduce their costs going forward and increase their net income?
Proactive rather than reactive
Reacting to damage which needs to be repaired sooner rather than later could save private landlords a significant amount of money going forward. Tenants now have the right to take landlords to court if they refuse to carry out repairs. Landlords would be left with the cost of the repairs and legal expenses on top. So, a proactive approach to repair and maintenance may require additional investment in the short term but will yield long-term benefits.
Maintaining tenant relationships
The vast majority of landlord/tenant relationship breakdowns tend to occur due to a lack of communication. This can lead to simple misunderstandings blowing out of all proportion and sometimes see tenants move on. A good landlord/tenant relationship is likely to encourage tenants to remain in the longer term which in turn saves money on advertising for new tenants. This should also reduce the periods when properties might be empty and therefore non-income producing.
Grouping insurance policies
Many private landlords will find potential savings if they group together various insurances required for their property. If landlords have more than one property there is even greater potential for savings going forward. Each individual saving may seem relatively small but the cumulative impact can be significant especially over a number of years. At a time when regulatory obligations and legal liabilities are eating into private landlord incomes it is essential to make savings where possible.
Deals with tradespeople
Whether you have one property or more than one private rental property there is scope to make long-term savings when employing tradespeople for maintenance and repairs. An exclusive contract with local tradespeople should allow you to negotiate a discount. If you have more than one property in the local area then there is potential for even greater savings. If you don’t ask, you don’t get!
Use all of your allowances
While governments have been attacking the net income of private landlords in recent years, it is essential that you use all of your personal allowances and even consider switching your properties into a company. If you can expand your tax-free allowance by placing your property investments in joint names with your partner then take advice about the correct way to do this. While some investors have decided to leave the buy to let market, those who are proactive and utilise their full allowances can still make a significant return.
We live in a day and age where second-hand furniture is often available for a pittance. The majority is relatively undamaged and certainly fit for purpose in a family home or rental accommodation. There is potential to make significant savings in this area and while some landlords are “too proud” to do this, it makes perfect sense from a business point of view. Let’s not forget, in even the most careful of environments brand-new furniture will very quickly look second-hand.
Don’t forget the opportunity to remortgage
UK base rates have been at near historic lows for some time now and mortgages have followed suit. For those who have owned rental properties for more than a decade there may be the opportunity to refinance on significantly reduced rates. There will certainly be the chance to fix your mortgage rate for two, three and five years and potentially beyond if you shop around. It is no exaggeration to say there is the potential to save thousands of pounds by remortgaging your property on improved rates. Why aren’t more private landlords doing this?