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Maximise Your Rental Property Profit

Updated on November 1, 2009

Increasing the profit on your rented property investment means either raising the amount of annual rent received from tenants – or reducing the level of expenses. Both are often achievable with a little thought and some careful planning. There are things you can probably do straight away, while others may take a little time. Here are three ideas to get you started:


Some landlords fail to raise the rent on their let property when an anniversary falls due, even though the tenant is expecting it to happen (because their tenancy agreement suggests an annual increase will be made). This oversight might be due to a lapse of attention (landlords often have other jobs to keep them busy) or it could be because they don’t want to upset the tenant and inadvertently motivate them into moving.

Raising the rent should not be automatic. Much depends on how the local market is performing and whether there have been significant changes over the course of the year. For example, at the start of the tenancy it may have been appropriate to command a high rent, because tenant demand was high and comparable accommodation supply in the neighbourhood was low. If during the year the volume of available tenants has reduced, while similar letting units has increased, it would be inappropriate to try and increase the rent. Doing so would probably encourage the tenant to vacate.

However, unless the landlord has updated his research (by checking what the local situation is like now), how can he possibly know whether to proceed in raising the rent or not? A little time spent scanning through ‘To Let’ property advertisements and viewing local estate agent and letting agent shop windows will probably be enough to gain the insight required.

In addition, by staying in regular contact with your tenant throughout the period of tenancy, you will build a relationship through which you will be able to assess whether they are likely to stay (even if the rent is increased). While it is important you don’t harass your tenant by calling on them too often, there is everything to be gained by maintaining professional and friendly contact.


Landlords that suffer long voids (empty periods) are losing-out on the potential to earn from their property. Short voids are occasionally bound to happen. Typically these occur when a property falls empty at the wrong time of the year, such as during the festive period or at the height of the summer holiday season. During these times, most people have other things to think about and it may therefore prove difficult to find replacement tenants quickly.

Prolonged or frequent voids are another matter. These are often signs that the strategy and style of letting currently adopted by the landlord are not working. It is probably therefore time to make some significant changes, which ultimately should improve the level of income achieved through owning the investment property.

Perhaps the most common mistake made by landlords is one whereby they continue targeting a particular group of tenants, when those tenants are no longer available in great abundance. For example, a student-let property is fine, providing there are ample students around to ensure full year-on-year occupancy. However, if the nearest university, college or high school has constructed or expanded its own on-campus facilities recently, the volume of students looking for private sector accommodation may dwindle to nil. This can have a devastating effect on landlords that fail to make changes to their property investment strategy.

Clearly, if the property is designed mainly for students (through its layout, décor and/or style of furnishings), it may not be attractive to professional couples and others looking for a new rented home in the neighbourhood. Simple but effective alterations could vastly improve the likelihood of replacement tenants taking up the property. To achieve this, landlords should revisit their original research (assuming they did some) and compare their statistics and data to the current situation. If there seems to be a change in the type of tenant in greatest supply, perhaps it is time to change the design and style of the property, so it attracts a new target audience.


By far the greatest expenses to a novice landlord are the fees charged by letting agents. These charges dig a huge hole in annual rental profit. Rental income is not only reduced by the 10 to 15 per cent fee, there is also VAT (in the UK) applied to the service charge and further administrative and documentation fees as well. A property rented at £600 per month can lose well over £1,000 per annum due to these fees. This is the equivalent of leaving your property empty for up to two months every year.

Letting and managing a property is not rocket science. Anyone can do it, given a little time and effort to learn the ropes. Good planning and having a period free to absorb the basics of letting is often the key to success here, so don’t rush into the takeover of your property’s management until you are ready and equipped to do it. There are lots of books available, which will help guide you through the process. Joining a local landlord’s association should prove most beneficial too, as you can learn through other people’s experience and mistakes and take advantage of the many product and financial packages that membership of such associations tend to bring.

Cutting out the middleman is not only achievable – it is both profitable and satisfying too, so why not consider this as a goal worthy of your attention over the next few months. You could make it your next New Year’s resolution.


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      Jonathan Wood 7 years ago

      Interesting take on the issue. I've spent a lot of time looking at analyzing properties to produce a realistic expectation of the income and expenses the property would produce. But, yes, actively working to increase those incomes and reduce those expenses is certainly something that should not be forgotten!