Studio apartments are highly popular in London, where lots of working professionals come to live. London is also popular with tourists, with lots of opportunities to rent out a studio flat as a short-term let, as well as to tenants who will be using it as their main residence. Many people who work in London will rent studio apartments and smaller flats as somewhere to live throughout the week before returning to their main home on the weekend. If you are in the process of purchasing a studio apartment in London, or already have a property that you are interested in making a rental income from, you may have wondered if it’s a profitable venture.
Renting out an apartment in London requires a lot of research, and there may be some work to be done to ensure that the place is in top shape and ready for either short-term or long-term tenants. London is in high demand for rental properties. But how much of a profit you can make will depend on several different factors.
Using a Property Management Agency
If you have an apartment or flat that is ready to rent out, then you might be interested in working with an estate agency rent studio London. This can often be more profitable for landlords as the renting studio flat agency London can take care of everything from advertising your property and screening tenants to live in it, to moving the tenants in and dealing with ongoing upkeep and maintenance, along with repairs and emergencies. Most of the time, a studio flat rent agency London will charge property management fees that are a certain percentage of the rent, according to UpperKey. However, many landlords consider this expense to be one worth paying as it allows them to relax while somebody else takes care of the property.
Costs and Expenses Involved
Before you decide if renting out your studio flat in London is going to be profitable, whether you are interested in doing it yourself or working with a property management company like a rent a studio flat London agency, it’s important to consider all of the costs that are going to be involved with not only setting the studio up for renting but also keeping it in good condition and maintaining it over time.
As a landlord, you will be responsible for first making sure that the property meets health and safety regulations before you will be able to rent it out. This could involve adding fire alarms and carbon monoxide alarms to the property, ensuring that the boiler, heating system and electrics are safe, making sure that the windows and doors are safe, and making any repairs that could cause accidents like chips in the flooring or broken steps.
You may also need to pay for the property to be redecorated ready for tenants if needed, and in some cases, it might involve costlier work such as putting in a new kitchen area or bathroom area in order to ensure that the flat is attractive to potential tenants. You may also want to rent out the flat furnished, in which case you will need to ensure that the basics such as a bed, wardrobe, and seats are provided.
Another thing to consider before you decide if it’s worth renting out a studio flat in London is the rental value of the property. Consider similar properties in the area and how much they are being rented for each month. This should help to give you a better idea of how much money you can expect to earn on your property should you rent it out. Don’t forget to deduct anything that you might need to pay out of the rental payment you receive, such as a mortgage payment, insurance, ground rent fees, maintenance fees, and fees for a property management company if you decide to use one. This will help you get a clearer figure in mind for how much money you might be actually earning in profit each month should you rent out your apartment.
How to Maximise Profits
If you want to rent out a studio apartment in London and are interested in maximising your profits, there are a few ways that you can do this. Some of the most common options include:
While renting a property with furniture can sometimes command higher rents, as a landlord you’re not only responsible for purchasing the furniture, but also maintaining it and replacing it should it break, which can get costly over time. Along with this, many tenants who are interested in living in a studio flat long-term might be keener to get their own furniture as this gives them the chance to choose what they like for their home instead of having to use what’s already there.
While there are certainly lots of benefits of renting out your apartment through a property management company like UpperKey, the truth is that this is going to cost you. Each month, a property management company will take a fee from your rental payment for their services, ultimately reducing your profit. If you are in a position to do so, it might be worth considering self-management for your London studio flat. However, bear in mind that while this means that you will earn a higher profit, it also often means much more work.
Raise the Rental Value
There are lots of things that you might want to do to raise the rental value of a property. While this can be quite limited in the case of a studio flat, it’s worth looking into anything that you can invest in to make the property worth more, and in turn, attract tenants who are willing to pay a premium for it. For example, this could involve fitting smart thermostats to the boiler and radiators that tenants can control remotely, or making the property more efficient in other ways, such as adding insulation.
Heated underflooring can also be something that tenants might be happy to pay more for, along with soundproofing, especially if the flat is located in a large block. A new, modern kitchen and bathroom will also add more value to the property, along with space-saving solutions if the flat is small. While all of these improvements will cost you to set up, they can ultimately pay for themselves over time if they raise the rental price.
Shop Around for Expenses
When it comes to the expenses that you are paying for your rental flat, such as a mortgage and insurance, it’s worth shopping around to see if you can save money elsewhere.
Transferring your mortgage to one with a lower interest rate if you can, for example, might be worth looking into as this will reduce how much you have to pay monthly, and ultimately leave you with more profit. Along with this, insurance is definitely something that is worth shopping around for when your policy is coming to an end. Whether you simply have building insurance for landlords or have rent guarantee insurance and other policies to pay for, you can use comparison sites to look for the best deals, and switch whenever you are able to in order to make sure that you are not paying more than necessary.
Get the Right Insurance
On the topic of insurance, there are several insurance policies that you can take out on your studio flat to reduce the risk of you losing out on profits. While these might eat into your profit month by month, you may be glad of getting them in situations where they kick in and pay out. For example, you can get rent guarantee insurance that will cover you financially in one of the most stressful situations that landlords can find themselves in; tenants failing to pay the rent.
With this type of insurance policy, if your tenants get into rent arrears of a certain period such as one month, the insurance will pay out, so you’re not losing your income or profits while you try to deal with the situation. Loss of rent insurance is another policy that is worth considering; this one will pay out if you’re in a situation where damage to the property has left it standing empty and unable to be lived in for a certain period of time.
You may also be interested in renting out your studio flat in London on a short-term basis. Instead of having a tenant that lives in the flat, you’ll be renting it to different tenants who are staying in London for a few days or weeks at a time. You can do this through platforms such as Airbnb. However, bear in mind that in London, there is a limit of six weeks on short-term lets, unless you have the appropriate permission from the council to let the property out for longer. There is no limit on long-term lets.
Whether you already have or are thinking of investing in a studio flat in London, renting it out can be a profitable venture with the right strategies.