As more people are opting to rent in the United Kingdom instead of buying, the demand for rental properties has soared. Housing supply hasn’t kept pace, however, creating the perfect conditions for aspiring landlords to launch profitable rental businesses.
If you’re wondering how to tap into the potential of the UK property market and establish a rental business that is destined to thrive, this article is for you. It covers everything prospective landlords need to know to start their property rental business and scale it into a profitable enterprise.
Table of Contents
Identify a suitable location
Renting out property can be a lucrative business, but it all starts with finding the perfect location. Focus your search on areas that are in demand with renters. University towns are a good example, as are major cities attracting young professionals looking for their first apartment away from home. Anywhere that the housing supply is falling short of demand and you’ll have renters lining up.
Stay ahead of the competition by keeping an eye out for new listings and see which locations are being snapped up the fastest. When you spot a promising property on the market in a sought-after area, act fast to make it yours.
Do your research
Before venturing into the business of owning rental properties, it’s crucial to do a bit of research. That means taking a deep dive into the local market to understand what comparable properties are fetching in price and how quickly they are moving from “for rent” to “rented”?
By conducting market research, you’ll be able to see the property types that are in highest demand. Recent research shows that terraced properties with parking and a garden are the most highly sought after in the UK, although this can differ, depending on your city/town. Once you have this information, focus your search on similar properties to reap the rewards.
Create a business plan
With knowledge about the local property market under your belt, you can develop a business plan to launch and grow a successful rental business. Outline your financial goals and target metrics, as well as the strategies you plan on implementing to achieve them.
In addition to researching the legal obligations of landlords in your area, outline your marketing tactics to attract ideal tenants. It’s also a good idea to decide if you want to use property management software to keep on top of tasks. With a comprehensive roadmap guiding your business, you’ll have a much better chance of thriving in what can be a competitive sector.
Select a suitable property
The secret to a thriving rental property business lies in finding the perfect place. When searching for a new investment, keep your eyes peeled for properties in locations surrounded by renter-friendly amenities, such as restaurants, parks and public transport.
You want a property with enough space to be attractive to renters, but not so big that it could end up being a maintenance nightmare. Ideally, it should be ready for tenants to move in or at a price low enough to warrant spending big on a makeover. Before purchasing, always crunch the numbers to determine your potential return and how this compares to other properties in the area.
Secure any necessary licenses and permits
Before you welcome your first tenants, there are a few legal hoops you’ll need to jump through to ensure your business is compliant. Obtaining the proper licences and permits may seem tedious, but it could save you headaches down the road.
At the very minimum, you’ll need a landlord licence, safety certificates for gas and electricity, as well as approval from the local council. These requirements vary by location, so do some research to find the specific regulations in your area. A few hours spent getting your paperwork in order is a small price to pay for avoiding potentially costly legal issues in the future.
Advertise your property
Once your rental property is ready to go on the market, it’s time to spread the word. An online platform such as Rentola is a good place to start as it showcases the largest number of private rental listings in the United Kingdom. This includes flats to rent in Wolverhampton, beachside homes in Cornwall and semi-detached properties in Leeds. As a landlord, all you need to do is create an inspiring listing description that details the property to rent in Wolverhampton, then upload a collection of high-quality images for prospective tenants to peruse. Once the listing goes live on Rentola, it will be beamed out to tenants searching in your location and within your property’s price range.
Set competitive rates
As a landlord, finding the sweet spot between attracting quality tenants and maximising profits can be tricky. First, investigate rates for comparable properties in your area to get a sense of the market. For example, the average price of a rental property in London is around £2,127 per month while for the rest of the UK it is £1,060. By sourcing this information for your selected area, it can help pinpoint a rate that’s enticing yet still competitive. Next, factor in your expenses to ensure the rental income exceeds costs for taxes, insurance and maintenance. Don’t forget about building in a profit margin too!
Aim for a rental rate that satisfies your financial needs while remaining fair and appealing to tenants. The ideal rate attracts responsible renters who will reliably pay on time each month while keeping your property in excellent condition.
Conduct regular maintenance
Before starting a rental business in the UK, it’s important to be aware that it’s not a case of “set and forget”. Ongoing maintenance is all part of being a good landlord, whether it’s preventative or in response to issues. When something breaks or needs fixing, always do your utmost to respond promptly and have issues repaired as soon as possible.
If you take pride in providing quality housing, your reputation as a responsive and responsible landlord will spread. Satisfied tenants also tend to stick around longer, saving you the hassle of lost income during turnovers.
Profitable and rewarding
Launching a property rental business in the UK offers great potential for making money and can be a rewarding enterprise. But it does require landlords to do their homework to fully understand the market and regulations, as well as ensure they have sufficient funds to cover purchases, renovations and unexpected maintenance issues.
By following this advice, you’ll be poised to earn a steady income in the UK’s rental property sector, coupled with the satisfaction of offering quality housing to tenants.