In many countries like the UK, letting a property remains one of the most viable businesses. But it can also be costly. The most pressing question then is, how can landlords learn to save money and, who knows, hopefully pass some of these savings to their tenants?
Here are a few options they can pursue:
1. Monitor Utility Bills
Monitor utility bills for signs of leaks and faulty appliances. An incredibly simple way to save money is to carry out regular wall cavity checks to check the quality of insulation that your home provides. This also applies to tenants as well, who should ideally do checks every six months upon moving in to ensure that the property they are renting has sufficient insulation. This keeps heating and electricity costs low, as well as provides a healthier living environment.
Other ways to save money on utilities include:
- Monitor Water Consumption. Water consumption can be monitored by regularly checking water meters to ensure they work properly and provide a fair usage measure. A faulty or inaccurate meter will not only result in a higher water bill but can also mean that excess water is being used without the tenant’s knowledge. This excess use is essentially wasted money.
- Introduce a Payment Saver System. Offering tenants ways to save money on utilities is a good way of encouraging them to use less. A payment saver system for gas and electricity, where the tenant pays a lower price in return for paying their bill on time every month, is one method that has been proven to reduce bills significantly.
2. Maximize Tax Deductions and Allowances
Running a property business on top of working full-time can be quite demanding. Thankfully, running a let property is tax-deductible in the UK, meaning that almost everything related to it can be written off against tax. This includes things like repairs and maintenance, utility bills, purchase of new appliances or furniture for the house, management fees, advertising the property to potential tenants, phone bills, and more.
You can also claim capital allowances for businesses. Capital allowances are a system that allows businesses to reduce their profits by money spent on items for the residential let property. It’s based on tax law and the assumption that everything bought for a business is essentially used up or worn down at a certain rate and needs replacing.
3. Take Advantage of the “Deposit for Tenancy Agreement” Option
When taking on new tenants, landlords often ask for deposit funds upfront to cover any damage that may be done to the property in the course of their tenancy. Now, they can use this money to generate more income.
Many banks offer a service where these deposits can be held in savings accounts, offering very high interest rates so that they can continue to earn interest while held in trust. If a landlord has funds sitting idly in a high street bank, there is no reason not to take advantage of these services while being compensated for them.
4. Stay on Top of Repairs
Tenants will live up to a certain standard, but if a landlord neglects their duties to repair any damage done to the property, it can place both them and their tenants’ health at risk. Use these tips to make sure that any repairs are carried out in a timely manner:
- Always document and photograph everything when repairing or renovating the property. This allows you to provide proof to both yourself and your insurer of what work has been done. It also means that you have records of all changes made throughout the tenancy period should anything happen in later months.
- Keep a record of all correspondence, including the dates and times of when you speak to contractors or service providers. This is particularly important if they are third parties who may not have been used before by your tenants.
5. Update Yourself on Legislation Changes
It is also a good idea for landlords to update themselves on any changes in legislation that might affect the property business. With thousands of pieces of legislation introduced, amended, and repealed every year, it can be challenging to keep track of them all, especially for those who also work full time.
The best way to keep up with changes is by using an online service. Many different companies now provide tools, software, and apps that take care of all the legwork for landlords, providing regular updates on legislation changes related to property business as well as information for other aspects of the lettings process such as insurance or rent increases.
Running a rental property is like any other business: it incurs costs. The good news is that landlords can explore a lot of ways to spend less on expenses while still keeping their tenants happy.