How to Increase a Property’s Value: 9 Ideas to Improve Your Rental Performance
Increasing the rental yield that your property provides is one of the best ways of getting more out of your Buy-to-Let investment. Over the long-term, improving a property for tenants can deliver significantly more value and flexibility than simply ‘flipping’ a home.
The best thing is, improving a Buy-to-Let property is a relatively low outlay that can pay dividends further down the line, especially in a competitive market. More now than ever, renters are spending more time at home. By ensuring the property is a high standard, you can encourage longer rental periods and mitigate potential voids.
Furthermore, these improvements will only help your overall sale value further down the line.
How to add value to a rental property
Once you understand the rental value of your property – typically by working out the rental yields it can deliver – you’re in a good place to start adding measurable, realistic value to the property.
Below are nine ways to add value to your rental property, which can help you build a long-term, sustainable investment that allows for easy scaling.
Stick to the Basics
One of the most simple ways to increase rental value of a property is with regular maintenance. Ensuring you perform regular checks, between-tenancy cleaning and fix minor issues promptly is a good habit to have in the long run.
Whether you’re making sure appliances run smoothly or performing small cosmetic changes, these are quick wins that can often be overlooked.
If you’re more of a hands-off investor, many agents or other letting partners will be able to assist you with ensuring these tasks are performed when necessary.
Always Opt for Mass Appeal
While it’s always tempting to decorate a rental property with your own style, remember that not everyone shares your tastes.
Your property should ideally be a blank canvas that tenants can make their own. Your goal is simply to make the property appeal to the widest range of people possible.
Neutral colours and simple furniture (or a furniture pack from your property manager if possible) is the best way to go as this will ensure that no-one is immediately off-put by the choice of decor.
Renew Your Leasehold
One of the quickest ways for a property to lose value is by having a lease that is close to – or already – expiring. The nearer your leasehold comes to falling under the magic 80 years, the quicker your value falls and the more expensive it becomes to extend.
The difference between extending a leasehold at 79 years and 80 years can equal around £10,000, so it’s worth keeping an eye on the clock and extending with a few years to spare.
Renewing your leasehold well ahead of time can be a great way to keep property prices high, while also remaining attractive for buyers.
Prioritise Green Spaces
If your property has a garden, balcony or outdoor space, you’re already standing out in a competitive market.
A recent survey by the Royal Institute of Chartered Surveyors shows that 83% of experts believe – post lockdown – green spaces will be a major priority for most tenants.
With this in mind, ensuring that your property is properly marketed to tenants is vital. Make sure that your outdoor space is well-maintained and documented for any online marketing.
Maintaining the garden between tenancies is vital and it can be worth writing into the agreement who will care for the garden in the long-term. You may have certain rules regarding a balcony for example which should be relayed as early as possible.
Consider Investing in Quality
While this strictly happens at the start of an investment, it’s important nevertheless. Modern tenants are willing to pay more for the ‘added extras’ that can make a huge difference in the long-term.
Features such as extra security, parking, smart appliances and on-site amenities not only help your property stand out but will fetch a premium.
It’s expected that this shift in thinking will only continue, accelerated by social distancing measures that are keeping tenants at home where these amenities are appreciated more.
Focus on the Key Spots
It’s human instinct to focus on two distinct points of any property – the kitchen and the bathroom. Your tenants will likely do the same.
By putting your effort into these two rooms – whether that’s through simple cleaning or extra maintenance – you can make huge strides in raising the value of your property.
New appliances in the kitchen, whether they’re smart or not, will go a long way to improving the overall value. Similarly, making sure your bathroom is deep cleaned between-tenancies can ensure you impress every potential visitor.
Paint It… Blue?
Studies have found that the colour of your front door can have a huge impact on the value of your property. The winning colour? Blue.
Research by Sell House Fast, an online real estate database company, found that a blue front door added around £4,000 to properties sold in the UK.
By analysing how certain paint colours impacted sales prices on average, controls were put in place for square footage, house age, date and location to ensure a definitive answer.
Homes with front doors painted blue sold for an average of £4,000 more than expected – closely followed by white which added roughly £3,400.
While this might not help with rental yields, it can help with building value during your tenancies.
Consider a Bedroom Conversion
According to Property Price Advice, an extra bedroom can add 15% to the value of your home. Data suggests that a loft conversion with an en-suite bathroom is the most valuable addition, although the costs to implement can vary depending on the amount of structural work.
While this type of work can help with building property prices, it can also offer another potential rental opportunity – especially for houses in multiple occupation (HMO).
Always check within your planning authority before considering this type of structural change, as the majority of loft conversions will need planning permission.
Raise your Kerb Appeal
This is more of an add-on than a change you can make to a property but there’s no doubt that parking adds incredible value to any investment.
Studies by YourParkingSpace suggest that parking can add between 5% and 10% to a property’s value. Phil Spencer, the host of Location, Location, Location, goes one further. He believes that a prime city property can add £50,000 to its overall value with a parking space.
This is hardly a surprise considering that parking is – and probably always will be – one of the top requirements for tenants in the UK, where the average motorist spends nearly four days a year looking for a place to park.
While these tips represent a broad range of quick wins and longer projects, all of them can help you maximise the returns from your Buy-to-Let investment property – whether you’re looking to build rental yields or capital appreciation.