Fitzrovia, a key submarket in the London West End, has been undergoing many changes recently that have made it very lucrative for investors. Although there is some squeeze from other markets like Marylebone, Soho and Mayfair, Fitzrovia still has a lot going for it. The numerous businesses and giant corporations that have offices there make for abundant levels of renters for those who decide to invest in Fitzrovia real estate. As with other rental investments, investors owning real estate in Fitzrovia should always be looking for ways to ensure great rental yields. Here are the best ways of doing so.
Deduct All Expenses from Taxable Income
Many landlords do not deduct all the allowable expenses from their rental income. Some do not deduct anything at all. Dedicating all the allowed expenses from the pre-tax income reduces your overall tax bill, which leads to higher rental yields.
The expenses that landlords can deduct include all expenses incurred when renting out the property. These include the biggest operating costs categorised as allowable expenses. Some of these expenses, according to government guidelines, include:
General repairs and maintenance, excluding home improvements.
Council tax and utility bills.
Service costs - wages for gas safety inspectors, gardeners, and cleaners, for example.
Service charges and ground rents.
Legal fees - these are fees applied to lets of less than 12 months and renewals of leases of 50 years or less.
Know When to Bring Your Property to the Market
As with other investments, timing is key in rental property marketing. Although there is a steady demand for properties in Fitzrovia throughout the year, this demand and the supply of properties will fluctuate.
This translates to rental value that does not remain static throughout the year or within a given period. The fluctuation in rents depends on supply and demand not only in Fitzrovia but also within other neighbourhoods.
Landlords can also control when their properties are expected to be vacant, which can significantly affect their rental income. You do not want your rental property remaining vacant when there is high demand where you can increase the rent slightly for new tenants.
It is also important to remember that summer does not immediately translate into higher rental property demand, especially when you look at different types of properties.
Knowing all this, it is important to understand your local housing market to know when to bring your property to the market and how long leases should be. If you do not know how to assess the market like this, you can always partner with UpperKey who provide property management services. They will rent your whole property, guarantee rental income regardless of season, rent out the property, and take care of everything until your agreement is over. Such property management Fitzrovia arrangements give you peace of mind while guaranteeing rental income.
Refinance Your Property
To get a better return on your rental property, you need to keep costs as low as possible. A significant cost you might be dealing with is your mortgage repayment. If you have a fixed-rate mortgage that is coming to an end, it would be a good idea to consider re-mortgaging at a lower and more competitive rate.
Most mortgages have fixed-rate terms, where the interest rate does not change for some time. When this period ends, the mortgage reverts to standard variable-rate terms which typically have higher interest rates than fixed-rate ones.
Before the switch, you can re-mortgage the property to get better terms either with your current lender or a new one. Doing so will help you avoid the higher variable-rate terms, while also getting a new lower-fixed rate for a set period.
Refinancing is a viable option for reducing expenses, especially where you cannot claim tax relief as you could in the past under section 24.
Hire a Property Manager
Hiring a property manager is one of the best ways to increase your rate of return and return on investment on your rental property. A property manager does a lot more than managing the property because they also nurture your investment and ensure a good ROI.
They can screen tenants, do the necessary repairs, charge different fees, handle repairs and landscaping, offer new technological solutions and a lot more.
Rental property owners who want a hand-off approach to property management can hire companies like UpperKey who become your primary tenant, guaranteeing your rental income. They will work to ensure you always have maximum occupancy and handle everything entailing managing and taking care of the property.
The best thing about this property management Fitzrovia arrangement is that you receive upfront rent while not having to worry about the day-to-day running of the property.
Maintain and Upgrade the Property Between Tenants
All properties deteriorate over time due to normal tear and wear through use. Even though some wear and tear will not significantly impact your ability to find a new tenant for a vacated property, it can help in some ways. A few touch-ups can give you additional bargaining power when negotiating with new tenants allowing you to get the best deal for the property.
Tenants are increasingly looking at property photos online before choosing one. They will look at different properties within their price range in a given area before making their choice. Presenting your property in the best way possible will help you get more people through the front door and give you an edge over your competition.
While this seems obvious, landlords will sometimes overlook the small details especially if they are busy or own many properties. It is important to take care of the smaller issues you might not necessarily notice, but that keen tenants will.
Some of these issues, which are often irritating for tenants include:
Defective door handles
Cracks in the walls or floor
Draughty doors and windows
These seemingly minor repairs will cost money to fix but think about the potential opportunity cost if the property remains empty for a few months because you did not take care of them. Taking care of these small issues will also show your tenants that you care about the property and the experience they will get when living in the property.
Also, remember to change the images on all your property listings once you complete these repairs. High-quality images as well as compelling copy will also help generate adequate demand for the property.
Consider Adding Extra Furniture
Lifestyles have changed over the past few years as the number of remote workers has increased. London has a very high number of remote workers, and some of them will spill into areas such as Fitzrovia.
Reviewing the furniture you provide as part of a tenancy and adding items remote workers need and will find useful can make your property seem more desirable. One simple thing you can do is include a desk and chair in the bedroom which typically double up as home offices.
Adding extra storage space is also a good idea whether you are targeting remote workers or not. Wardrobes in all bedrooms as well as shelving units, cabinets, and drawers can all help provide the extra space.
Add Extra Amenities and Appliances
You can also increase the value of and demand for your property by adding a few amenities and electronics that you do not typically find in rental apartments. These should be things that make the lives of your tenants easier.
Some electronics and appliances to consider include speakers, smart TVs, dishwashers, coffee machines and washer-dryer units. These additions lead to a higher yield by generating higher demand for your property. They can also justify a higher asking price.
You can also invest in modernising your property by adding smart home technologies. These include smart locks, smart meters, smart heating, and smart security. Most renters are unlikely to bring their own due to the impracticality of doing so and will consider them an important addition.
Consider Allowing Pets
There is an imbalance between the demand and supply of properties that allow pets. Due to the scarcity of pet-friendly properties, renters who own pets will typically stay longer and care for the property better.
While you may not be able to justify a higher asking price due to a tenant owning a pet, you more or less guarantee your income even in slow seasons. These void periods can be extremely costly to the business and pet owners can help you avoid them.
Some pet owners do not mind paying more for a pet-friendly property. They understand there may be special considerations for them to live in those properties and they are willing to pay for these considerations and the potential inconvenience their pets cause.
Every property owner wants to get the best return on their investment. Increasing your rent yield means finding ways to get more from the property while keeping costs as low as possible. There are numerous ways to do both, with property owners who do not want to deal with all of it having the option of working with a property management partner.