Can you increase your rental income? Investing in buy-to-let property in Brighton and Hove could be a good move if you are looking to supplement your income. With its iconic beach, lively town centre and easy access to London, the area has enduring appeal as a place to live for renters and frequently tops the charts of the UK’s best cities to invest in rental property.
The benefits of becoming a Brighton landlord include a regular monthly income (the rental yield) as well as a potential increase in the value of the property over time. While interest rates are set to increase, they are still reasonably low. So, despite many changes to the rules and taxation around buy-to-let, property continues to offer a good return.
These are a few tips and tricks that might help you to increase rental income on your property.
At its simplest rental yield is the money you make each year on your rental property investment. It’s the annual income you make from rent, shown as a percentage of the price you paid for the property. Read on to find out how to calculate the rental yield on your rental property.
Calculating your property’s rental yield is key when weighing up how well it will perform as an investment. Rental yield is a property’s return on its purchase price expressed as a percentage.
To calculate yield, start by taking the total rent received over a year. So, say your Brighton property will attract a rent of £1,500 per month, this adds up to an annual income of £18,000.
Next, take the property’s sale price (the Brighton and Hove average is currently £475,000 according to Rightmove).
Add to that the costs of buying, the main one being stamp duty. Using the HMRC stamp duty calculator, the tax payable on this property would be £28,000.
Add an estimated cost for professional fees of £2,000, and you have a total cost of £505,000
Now perform the calculation: 18,000 ÷ 505,000 x 100 = 3.5%.
You can also use a rental yield calculator to help you work it out, such as this one on the Which? website.
Most commentators regard a rental yield of at least 3.5% as a good investment – compared to savings rates which are currently much lower at around 1.3% maximum for fixed rate accounts. As Brighton is a desirable location for renters, your rental yield could be much higher. If you want to increase rental income on your property, there are plenty of approaches to consider.
How much income you make from your property will depend on the going rate for a rental in the area. If you want to increase the rent, you need to convince prospective tenants that your property is worth the money. However, there are some things you can do to maximise your income by ensuring your property commands a premium:
You must be clear who will be living in your property and ensure it meets their needs and wants. So, if you’re looking for young professionals, think about smart tech additions, modern, sleek, easy-to-maintain interiors and good transport links. If marketing to families, location is key, and you need to consider good schools and plenty of room and outdoor space.
Selecting the right Brighton and Hove location for your rental property can increase your rental income potential. It’s a classic recommendation when buying property, but it still stands. Good transport links and local amenities are popular with many tenants. Up-and-coming areas can offer lower priced properties with the potential to increase your income as local rental rates rise.
An extension or loft conversion is costly but could pay off if you’re in this for the long haul. If you can create an extra room out of the ones you have without adversely affecting the property, all the better.
Renting out the property as a house in multiple occupation (HMO) could increase your income, but be mindful of the rules around HMOs in the Brighton and Hove area – see the council website for more.
Creating an extra bedroom, bathroom or office room could significantly increase the amount of rent you can charge. You can charge more for the additional accommodation a bedroom provides. Many tenants will consider paying more for the convenience of rental properties with an extra bathroom.
Many landlords don’t allow pets for fear of damage to the property. However, the government has moved to change this and make pet-friendly rentals standard. In the meantime, allowing pets will make your property more sought-after by owners and mean you can ask for a higher rent.
Having your property lie empty between tenants can really eat into your profits, so minimising void periods is essential to upping your rental yield. You can do this by being a model landlord who responds to tenants’ issues swiftly and maintains the property well. Keeping on good terms with your tenants means they may give you the heads-up if they’re moving on, so you can advertise the property in advance for a quick turnaround.
You can also improve your rental yield by cutting your outgoings. If you are buying a property, make sure you take a business-like approach and don’t pay over the odds because you’ve fallen in love with a place. Similarly, if you are doing work on the home, have a budget and stick to it. Go for decoration and furnishings that are solid and long-lasting, as well as appealing to your target market. Also, shop around for the best mortgage and landlord insurance deals, so you never pay too much.
Small steps like a fresh coat of paint, retiling a bathroom or changing the kitchen cabinets can make a lot of difference. A simple update in a neutral colour can go a long way to brightening up a property. Remember to care for the outside of your property as well. Tidy up the garden or patio if there is one. Even if it’s just a small tiled area, tidying and weeding can improve its appeal.
What else can you do to make your property stand out on the rental market and potentially increase rental income? Think about the details that solve a common problem for your target demographic, or add to prospective tenants’ enjoyment.
Installing a good security system could give your property the tenant appeal that allows you to charge more. Considering 67% of UK households use streaming services, and many still work from home, an up-to-date broadband connection could be an attractive extra. Since the start of the pandemic, gardens have been in high demand, so make the most of any outdoor space you have.
And with increasing concern for the environment and the cost of living, rental properties with green credentials are becoming increasingly popular. If you can improve the property’s energy performance rating, your tenants may be prepared to pay more, knowing they will save on energy bills.
Whatever you do, always calculate the costs. You don’t want to lose money, so budget meticulously and ensure any additions are justified.
If you’d like more advice on increasing the rental income on your Brighton and Hove rental property, we’re here to help. Contact us to discuss our services for landlords.
Do you have any questions about the topic above? Our team of experts is here to help in answering any query you may have.
Fueled by his desire to be the best, most reputable estate and lettings agent in town, Steve has spent his career cultivating The Property Shop. Steve prides himself on his authenticity, honesty, and knowledge-base which is emulated by The Property Shop and his team.
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