With 18.5% of households being private renters in 2021, it is unsurprising that many landlords are looking to expand their investment portfolio. However, with new fees and the loss of tax relief challenging profit margins, we present 5 top tips on how buy-to-let landlords can be extra savvy to boost their revenue during their property dealings. 

Top Tip 1: Find the Right Area

There is undoubtedly still money to be made in buy-to-let, especially in cities popular with young families, students and workers, which inevitably pushes up demand and therefore rent. Sourcing properties near places such as schools, universities and hospitals is extremely sensible since it is likely that both locals and relocators would want to rent nearby.

Finding the right area should reduce the risk involved when purchasing a property and make it easier to sell in the future. Owning a property far away from local amenities or transport links may prove more difficult to shift if need be. 

Top Tip 2: DIY

Modernising a property can make it significantly more appealing to tenants, and in turn secure your renters. Instead of hiring a professional to do so, consider doing the refurbishments yourself. Saving money on home improvements can help to maximise your profits and means that you learn a new skill at the same time.

If the work needed to be done is beyond your scope, make sure to shop around when hiring help for home renovations to find the most competitive price. Likewise, making an effort to save on the cost of materials would help to cut down on your expenditure. 

You can also check forums such as eBay or Facebook marketplace to find cheap furniture online. Many people often give away objects in great condition for free, so it is definitely worth taking advantage of if your tenants would like the property to be furnished.

Top Tip 3: Set Up A Limited Company

If you haven’t done so already, purchasing your next buy-to-let property through a limited property may help to reduce tax payments on your rental income. If your properties are owned by a company, then costs such as mortgage interest payments can be deducted as a business expense. The company would then pay corporation tax on profits, with the tax rate currently set at 19%. 

As a landlord you can also draw income in the form of dividends. Just make sure that you get expert advice before creating a company as the sums do not always add up for everyone.

Top Tip 4: Consider New-Build Properties

With the volume of new-build properties flowing, it may come as a surprise that purchasing a new-build property could be a wise financial decision. Whilst incentives such as the Help to Buy Scheme are helping property developers to secure sales, affordability issues still means that not all new-builds can be purchased privately. Some developers will offer the new abodes exclusively to investors at a discounted price since they can reduce their expensive marketing costs whilst doing so. 

Alongside the exclusive discount to landlords, new-builds can lead to higher rent since many tenants favour the idea of renting a property with a newly fitted kitchen and bathroom, modern technology and triple glazed windows. Most new homes in the UK are also made with much higher energy efficiency standards than older homes, meaning it would be easy to adhere to the Minimum Energy Standards set in April 2018 at efficiency rating E. Better yet, you could have peace of mind if anything went wrong as nearly 80% of new-builds are under the National House Building Council Warranty which provides crucial insurance for any physical damage or breaches of the building control. 

Top Tip 5: Look Into Ex-local Authority Properties

A further option worth considering is purchasing an ex-local authority or former housing association property for a considerably lower price than other homes in the same area. Purchasing this type of property usually offers better yields than privately built homes since they cost much less to buy but still command reasonable rents.

Whilst local authority-built properties usually grow in value a lot slower than private properties, the high rental yields make it a viable prospect if you need to sell it on after a couple of years. 

Final thoughts

Considering our top tips mentioned above and focusing on properties with strong yields should certainly stand you in good stead for building a successful portfolio.