One of the many UK landlord responsibilities is to provide accommodation that’s ‘fit for human habitation’. But this shouldn’t mean simply offering the bare minimum of comfort, safety and cleanliness.
Tenants are a savvy bunch. No longer content to accept the mediocre, they expect increasingly higher standards when choosing a rental property.
And in turn, professional landlords are recognising this demand for rental renovations. A recent survey showed that 77% of them invest in upgrading their rental property after purchase. And since 2006, the number of homes classed as ‘not decent’ has fallen by 47% to just over 23%.
Here we explore why it pays for landlords to update and upgrade.
Why should I renovate my rental property?
If rental renovations have never been a priority and you can still easily collect the rent, you may be wondering why you’d need to change your approach.
Maybe you feel you can’t afford to upgrade the property as it’ll eat into your profits. But if you’re not committed to investing in your property, perhaps consider whether a different form of investment would suit you better.
In an increasingly competitive market, there are numerous reasons why making the effort will pay dividends.
Stand out from the competition
A vacant property equals lower profits so keeping it looking fresh and appealing will decrease the chances of it lying empty during a prolonged tenant search.
Consider why someone would choose your property with its dated kitchen or worn-out carpet compared to one on a nearby road which has been given some TLC.
Increase the rental price
When you keep on top of rental renovations, you’ll be in a better position to charge more. The money spent on updating the bathroom or replacing flooring will soon be recouped by these increased rental payments.
Improve energy efficiency
Private rental properties must now have an EPC rating of at least E. And with tenants becoming increasingly eco-aware, the higher this rating, the more attractive your property will be.
Replacing draughty windows or installing a more energy efficient boiler will also help to reduce utility bills. And regardless of whether these are paid for by yourself or your tenants, improving a property’s eco credentials is a win-win for all.
Decrease ongoing costs
With new appliances in place and an updated heating system working efficiently, you’ll be reducing the chances of breakdowns and landlord repairs. The result? Less hassle, more convenience and lower costs.
Boost tenant satisfaction
When tenants set up home in your property with modern fixtures and fittings, they’re more likely to love living there. And this, of course, makes it more likely they’ll renew their lease.
A simple way to assess whether your tenants will be happy is to ask yourself if you’d want to live there. Always aim for that answer to be yes.
This is all about investing in your tenants’ interests to maximise your revenue generation.
Increase property value
Naturally, if you improve your rental property when the market is buoyant, you’ll increase its value.
Enjoy landlord tax benefits
Another bonus to undertaking rental renovations is that some of the financial outlay is classified as an allowable expense.
These include general landlord repairs and maintenance costs, along with the services of gardeners or cleaners to keep the property looking spick and span.
Additionally, you can claim relief for replacing domestic items, the 2016 replacement for the Wear and Tear Allowance.
While you can’t claim tax relief on the initial outlay of kitting out a property for the first time, it does apply when replacing an existing item including:
moveable furniture such as beds, wardrobes and sofas
furnishings such as curtains and carpets
household appliances such as washing machines and fridges
kitchenware
To take advantage of these landlord tax benefits, you must also ensure that:
the new item is a direct replacement for an old item
the old item is no longer available to use at the property
the new item must be for the exclusive use of the tenants
When ‘upgrade and update property’ appears on the long list of your landlord responsibilities, you’ll be keeping tenants happy, boosting your reputation and maximising your profits.
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