London has been a tough market for landlords over the last couple of years. Rents in Prime Central London fell 2.1 per cent year-on-year in February, representing two years of rental declines in London, according to Knight Frank.
However, the estate agency sees the market beginning to turn, as an uptick in the sales market is leading to a reduction in supply of rental properties.
Nonetheless, it remains vital for landlords to maximise the yields they can achieve from their property and we have a range of tips which we give to landlords using our property management service.
“Get the price right,” says Camilla Dell, Black Brick Managing Partner. “It might sound obvious, but too many landlords resist dropping their prices a few per cent, and instead find their property goes un-let for several weeks or even a couple of months.” An empty property isn’t earning a penny, meaning that even a fairly short empty period is worse in yield terms than a modest reduction in rent.
This point can be particularly important for owners of properties in new-build developments, where service charges can be relatively high – and which still need to be paid if the property is lying empty.
The choice of agent can be critical as well, says Dell. “One of the advantages of our management service is that we don’t find tenants directly, but instead we give our clients transparent and independent advice on the best agents for the location and the type of property.”
For example, in a new development, it can sometimes make sense to avoid the main rental agent or agents – they will have a huge amount of supply initially, and your property will just be another number. Using a different rental agent can open up your property to a different market and they may value your property more – especially if it gives them an “in” into a new development. Again, it’s important not to be obsessed by fees: an agent who can quickly find a tenant justifies a higher commission.
“We also advise our landlords to be flexible on furnishing. Presenting the property unfurnished will save on costs, but it’s important to be prepared to furnish the property if required. We work with a number of furniture staging companies and interior designers who can transform an empty property into a “show flat” at very competitive prices.”
Finally, it’s important to be able to trust your agent to find the right quality of tenant. They should perform checks to comply with the right to rent regulation – to ensure that all tenants over 18 are entitled to live in the UK – and follow up on at least two references. A good agent will also find tenants who will pay rent in a timely fashion, and be respectful of the property. Our property management service also includes ongoing repairs, maintenance and refurbishment to ensure that properties hold their rental and capital value over time.
“It might be a tough market for landlords, but with the right advice there’s no reason that they can’t maximise the rental yields they can achieve on their properties,” says Dell.