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Landlords: Tips To Deal With Tax Losses Without Hiking Rents

 
 
 
 
  31 May 2018

Given the amount of challenges that landlords have had to contend with in recent times, it is easy to see why many have felt they have had no option but to regularly increase the rents they charge at their property. There have been several increasing costs with buy-to-let tax losses being an issue for many landlords and studies indicate that many landlords are reacting by increasing their rates.

Figures collated by ARLA Propertymark in their Private Rented Sector Report, for March of 2018, indicates that 23% of tenants witnessed a rent increase in the previous month. This has been attributed to estate agents looking to recover their tax losses through rent increases.

Rising rental fees are common these days

The volume of tenants who experienced a rent increase was a six-month high, being the highest figure since September of 2017. In that month, 27% of landlords increased rent costs. This is likely to be concerning for tenants, and there will be little comfort taken from the fact that the 23% increase is lower than the year-on-year figure which was 25%.

The analysis for the report considered 286 members and it was found that both demand and supply increased in the month of March. It was found that the number of prospective tenants who were registered per member branch was 61 in February, increasing to 66 in February. With respect to the volume of rental properties that letting agents managed, this increased from 175 to 179 in the same time-frame. However, it was noted that there was a slight decrease on agency stock on annual figures, with the March 2017 level being 183.

Landlords should look for other ways to increase income if possible

While it is understandable, although difficult for the tenant, that some landlords decide that increasing their rental fee is the only way to offset increasing costs, there may be other options. A landlord that regularly increases rental fees runs the risk of losing good tenants, and there is even the threat of void periods. Therefore, it would be advantageous for landlords to consider alternative ways to recoup tax losses rather than merely increasing rental rates.

Some options landlords should consider include:

  • Providing additional services for tenants for a fee – dry cleaning or parcel collection are good examples
  • Rent out parking spaces or storage space if these are not in use
  • Add more furnishings or features to the property
  • Allow pets but charge additional fees for doing so

It is becoming increasingly important for landlords to consider ways to add value to the service they offer. There is also a need for landlords to be creative, maximising income without making the tenant feel as though they are continually paying more for services. Many tenants will be happy to pay for services that they need, and which are right for them, so make sure you always offer with what you provide.

Being a landlord can be difficult, which is why we are more than happy to assist you. Any landlord looking for guidance and help should contact Jezzards in confidence on 03330 433 633, and we will be delighted to help you if we can.


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