How to Maximise Rental Income in London

It is common knowledge that owning property in London can be an expensive endeavour, however, if you are a landlord, you will be happy to know that there is still a way to maximise your rental income in London. 

As a landlord, it is probably one of your main goals to ensure that owning your property is profitable and worth it. For you to be able to cover the financial costs of your mortgage, repairs and maintenance you will need to ensure that your rental yield is high enough. 

Among other costs, having landlord insurance is a necessity if you want to ensure that your property is secure and looked after. Contact CIA Landlords today for more information.

Although property price and location may feel like a hindrance in London, there are ways to cut outgoings and maximise your profits. 

What is rental yield? 

A property’s rental yield is translated as the annual return on investment that you make as a landlord on any buy-to-let property. The rental yield refers to the amount of money left over after rent and then divided by the value of the property. The answer is then multiplied by 100 to be used as a percentage. 

What is a Good Rental Yield?

For your rental yield to be considered profitable, you would need to have a yield of 8% or higher. The rental yield will differ depending on the location that your property is located in. On average, the rental yield in London is between 4-5%, compared to cities like Nottingham and Liverpool which are up to 12%. 

However, there are different things that you as a landlord can implement to increase your rental yield.

How to maximise rental income in London

What is your tenant profile?

Before renting out your property, make sure that you have the type of tenant in mind that you want to lease your property to. This will make it a lot easier for you to tailor your property to the desires and needs of your potential tenants. If you do this, you will be able to offer the most suitable property to potential tenants which will enable you to charge premium prices. 

If you are targeting students, you want to make sure that your property is near public transportation and cheaper restaurants, for example. But, if you want to target young professionals, you will want to ensure that you furnish the property with the perfect mod-cons. Similarly, transportation is important for young professionals. 

On the other hand, if you are targeting young families, you will want to ensure that there are schools situated nearby, including colleges and fun amenities that families can access. 

Location

If you are interested in investing in London, or if you already have a property portfolio in London and you are on a mission to maximise your rental income, one of the most important aspects to take into consideration is the location of your property. 

Keeping on the lookout for a location that is lower in the purchase price, but in an area that is on the rise in popularity, you have a great chance of increasing your rental income. Things to take into consideration are schools, amenities and great transportation links. 

Facilities

Tenants want to have access to a property with time-saving facilities, for example, dishwashers, driers and WI-FI that is high-speed. If you ensure that you implement these types of facilities, you will have a higher chance of being able to maximise your rental income. 

What does your ideal tenant want and need in their flat or apartment? Once you figure this out, you will be able to understand the ways in which you can take out landlord contents insurance to protect your property and its facilities. 

Go green

With the government’s goal of reaching net zero by 2050, it is safe to say that there is a colossal focus on sustainable living and ‘going green’, and you can capitalise on this as a landlord, too – even in a concrete jungle such as London. 

There are ways that you can do this, for example, by improving the insulation of your property as well as energy efficiency. New properties must have an Energy Performance Certificate (EPC) rating of “C” by 2025 to comply with the Minimum Energy Efficiency Standard (MEES). Additionally, ensuring that the boiler in your property is being looked after is another way of implementing sustainability for your tenants. 

Maximise on space

If there is an extra space in your property that can be renovated into an extra bedroom or bathroom is a great way to increase your rental income. A second bathroom or extra bedroom is always a key factor in being able to attract great tenants. 

Avoid Vacant Periods

Although not all things in life are controllable, you should try as much as possible to avoid having any vacant periods with your properties. 

One way that you can reduce the likelihood of having extended vacant periods is by asking your tenants in advance about what their plans are regarding renting. If you know in advance that you need to start advertising for another tenant, you can avoid this. 

Consider Allowing Pets

Not many landlords are open to allowing tenants to have pets, however, this may be something that you can maximise on. This shows that you are flexible and tenants always tend to appreciate that. In this way, you will be able to charge extra in rent due to the high demand in wanting pets. 

Regular Rent Reviews

Always be on the lookout for external factors that can influence the rent that you charge. In doing so, you will keep up to date with the property market and will be able to increase or lower your rent as needed. 

Things to consider are any new developments in the area of your property such as schools or retail developments.

Assess Your Outgoings

If you already have a property portfolio, you will probably be aware that keeping an eye on your financial outgoings is vital to the success of your rental income. Prices are always fluctuating so being aware of any deals that you can utilise and implement will support you in increasing your rental income. 

Keep Up to Date with Regulations

It is your responsibility as a landlord to ensure that you keep up to date with regulations that are relevant to leasing out a property, such as health and safety regulations, and the Renter’s Reform Bill’s new changes, tax regulations, or landlord insurance. 

Get in touch with CIA Landlords today for more information on the type of landlord insurance you need by calling us on 01788 818 670.