Can you make money being a landlord? It’s a good question, especially as rules, regulations and tax breaks continue to change, in many cases not for the better. But with some expert insight and the right strategy, the good news is that buy-to-let investment can still be a lucrative way to create a profitable income stream. Let’s take a look at five ways to help you optimise your profits as a landlord. With demand for rental property high, and supply generally low in many areas of the UK, there is plenty to attract the buy to let investor. But the question of how to make money as a landlord will of course always arise. Here are some strategies you may wish to consider to help you get the most out of your landlord business. Consider setting up as a company Changes to mortgage interest tax relief have proved to be one of the biggest threats to landlords’ investment profitability, with higher-rate taxpayers facing more of the rough end of the stick than anyone else. For this reason, many landlords have been considering setting up as a company. This allows you to offset all your mortgage interest when calculating your tax bill, instead paying Corporation Tax on your profits. A company structure can often work well for landlords with larger portfolios. However, for those with just one or two properties, the benefits may not necessarily outweigh the costs, especially bearing in mind that a move to a company structure will require you to sell your properties to your company, which will incur a Stamp Duty liability. If you’re unsure as to the right structure for your buy to let business, be certain to take professional advice. Source and retain the best tenants A good tenant who pays their rent on time and treats your property with respect is worth their weight in gold. You’ll therefore want to invest in finding the best tenants and, when you do, hold on to them. Void periods can be very costly to landlords, but there are plenty of ways to avoid them and be a good landlord, keeping the tenant happy by ensuring you react to any maintenance requests in a timely fashion being one of them. Also, when the time comes to renew the tenancy, make sure you get your rental rate right and can justify any rent increases, as if the tenant considers it unfair, they may well look elsewhere, leaving you with an empty property on your hands. Re-mortgage to a better rate It can sometimes be beneficial for landlords with a buy to let mortgage to switch deals, particularly if interest rates have dropped since the original loan was taken out. It is generally possible to secure a new mortgage six months before the end of a current fixed term, so it’s a good idea to start looking at your options in advance. You may also wish to consider a green mortgage which could provide you with a means to upgrading the energy efficiency of your property in order to improve EPC ratings. Reduce your management costs Property management costs can be one of the greatest expenses for landlords, whether you paying for a managing agent to handle the day to day running of your property, or you are covering the maintenance costs yourself. Managing agent fees can set you back between 12 and 20 per cent of your rental income. There is plenty of choice, which means you could save money by shopping around. When comparing agents, make a list of the services you genuinely need so that you do not pay unnecessarily for things you don’t need. You should always weigh up the pros and cons of being a self-managed landlord versus using a letting agent, and think about any added value that a property management service could offer you that will make it worthwhile, such as offering guaranteed rent. Avoid unpaid rent When thinking about how to make money as a landlord, you’ll need to prioritise avoiding unpaid rent, because it can be a costly issue to face. Even just a single missed payment can have a significant knock-on effect. There are various tactics you can use to deal with tenant rent arrears, or you could look at options that will help you avoid them altogether in the first place, such as a guaranteed rent scheme. How to make money as a landlord, with help from homes2let Here at homes2let, we offer a fully comprehensive property management service, with that all-important added value. Unlike a traditional property management service, the homes2let guaranteed rent scheme returns greater profits, whilst reducing your buy to let investment risk by ensuring your rent is paid on time every month, even during void periods. With no fees to pay or costs to cover, and with everything taken care of, you won’t ever have to worry about the likes of tenant sourcing and referencing, preparing your property for rent, meeting regulatory and legal compliance requirements, arranging property inspections or taking care of day to day maintenance issues. Why not talk to homes2let to find out more? Our helpful team has particular expertise in the South London buy to let investment market, and is ready to share a wealth of knowledge to help you make money from being a landlord. We welcome you to get in touch today.

5 Great Ways to Maximise Profits as a Buy-to-Let Landlord

18th May 2024

Can you make money being a landlord? It’s a good question, especially as rules, regulations and tax breaks continue to change, in many cases not for the better. But with some expert insight and the right strategy, the good news is that buy-to-let investment can still be a lucrative way to create a profitable income stream. Let’s take a look at five ways to help you optimise your profits as a landlord.

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The Bank of England’s recent decision to hold interest rates at 5.25% has injected some uncertainty into the UK housing market. While the pause offers a temporary reprieve from rising borrowing costs, the impact of previous rate hikes is likely to be felt in the coming months, potentially leading to slower house price growth. However, Governor Andrew Bailey’s comments suggest a possible shift towards lower rates in the near future, which could reignite buyer demand and stabilize prices.

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Getting your marketing right is vital if you’re going to make your buy to let property stand out in the crowd. Successful adverting ramps up interest, attracting the right tenants and giving you more choice over the best renters. Here we share our top tips on how to market your rental property to help you find the best tenants faster, and boost your rental yield in the process.