The Best Property Improvements to Increase Rental Income
As a landlord, one of your main goals is to maximise the return on investment (ROI) from your rental properties. Whether you’re looking to attract higher-quality tenants, justify a rent increase, or improve the overall value of your property, property improvements can help achieve these goals. In this post, we’ll explore the best property improvements to increase rental income, backed by data and real-world examples to help you make informed decisions.
1. Kitchens and Bathrooms: The Heart of the Home
When it comes to attracting tenants and justifying a higher rent, the kitchen and bathroom are two of the most important areas to focus on. Modern, functional spaces can make a huge difference in rental income.
Why Kitchens and Bathrooms Matter:
Higher Rent Potential: A study from HomeAdvisor found that kitchen renovations can yield an average ROI of 80% to 90%, while bathroom improvements offer an ROI of up to 70%.
Tenant Expectations: According to the National Association of Home Builders (NAHB), 85% of renters consider the kitchen and bathroom to be the most important areas when choosing a rental property.
Recommended Improvements:
Kitchen: Installing modern appliances (such as a dishwasher or high-efficiency stove), upgrading countertops to quartz or granite, or even simply painting cabinets and adding new hardware can provide a sleek, updated look that will attract high-quality tenants.
Bathroom: Consider replacing old fixtures, updating the shower, and improving lighting. Adding storage space, such as a new vanity or shelves, can be a bonus for tenants.
2. Energy Efficiency: Saving Money and Attracting Eco-Conscious Tenants
With rising utility costs, many tenants are prioritising energy-efficient homes that can help lower their monthly bills. Making energy-efficient upgrades not only makes your property more attractive to environmentally conscious renters but can also lead to higher rent and a lower turnover rate.
Why Energy Efficiency Matters:
Cost-Savings: Energy-efficient properties can attract tenants by offering lower utility costs. Studies by The U.S. Green Building Council show that tenants in energy-efficient homes save 10–20% on their energy bills.
Increased Rent Potential: According to the Energy Saving Trust, properties with good energy performance ratings can command rent premiums of up to 5% higher than their non-energy efficient counterparts.
Recommended Improvements:
Insulation: Upgrading insulation in the attic, walls, and floors can help reduce heating and cooling costs.
LED Lighting: Replace standard bulbs with energy-efficient LED lighting, which is a relatively low-cost upgrade that can make your property more appealing to tenants.
Double Glazing: Installing double-glazed windows can improve thermal insulation and reduce noise pollution, both of which are attractive to potential tenants.
3. Open Floor Plans and Extra Living Space
The demand for open floor plans and spacious living areas has surged, particularly among younger renters who prefer a more modern lifestyle. Making your property feel open and spacious can make a significant impact on rental income.
Why Open Floor Plans and Space Matter:
Increased Demand: Rightmove data reveals that 40% of renters in the UK prioritise space as one of the most important factors when choosing a property.
More Rentable Area: Creating a more open space or adding additional rooms can give you the opportunity to increase rent.
Recommended Improvements:
Knock Down Walls: If your property is older and has more traditional layouts, consider removing non-load-bearing walls to create an open living/dining area.
Add a Conservatory or Extension: Adding a conservatory or extending your property to create an extra room can increase the overall square footage, which can directly correlate to higher rental income.
4. Outdoor Space: Maximising the Appeal of Gardens and Patios
In London, outdoor space has become more important than ever, especially following the COVID-19 pandemic, when many tenants sought properties with gardens or balconies. Outdoor space can be a huge selling point for renters.
Why Outdoor Space Matters:
Premium Rent for Outdoor Areas: Zoopla data shows that properties with gardens or outdoor space can command up to 15% higher rent than those without, especially in family-friendly areas.
Longer Tenant Retention: Tenants are more likely to stay in properties with attractive outdoor spaces. Properties with well-maintained gardens see a 5% lower turnover rate.
Recommended Improvements:
Landscaping: A tidy garden with new plants, lawn care, or decorative features can drastically improve the appeal of your property.
Decking or Patios: Adding a patio or deck area can create a usable outdoor living space for tenants, perfect for entertaining or relaxing.
5. Smart Home Technology: The Future of Rental Properties
Incorporating smart home technology into your property can set it apart from other rental units and appeal to tech-savvy tenants. From smart thermostats to security cameras, technology can offer convenience and energy savings.
Why Smart Home Technology Matters:
Rent Premiums: The National Multifamily Housing Council found that apartments with smart technology could command a 3–5% higher rent compared to traditional homes.
Attracting Young Renters: A survey by Zillow revealed that 67% of renters aged 18-34 said they would pay more for a rental property with smart home features.
Recommended Improvements:
Smart Thermostat: Installing a smart thermostat like a Nest or Ecobee can help tenants control their heating/cooling, saving money and providing convenience.
Smart Locks and Security Systems: Smart locks and security cameras can increase the safety and convenience of your property, which is especially attractive to younger, professional tenants.
Smart Lighting and Voice-Controlled Devices: Adding features like smart lighting or Alexa/Google Home devices can add a modern touch to your rental.
6. Curb Appeal: First Impressions Matter
The exterior of your property plays a vital role in attracting tenants. A well-maintained exterior can set the tone for the rest of the property and can create a lasting impression that leads to more viewings.
Why Curb Appeal Matters:
Increased Interest: Properties with high curb appeal tend to attract more attention, which can result in quicker leasing and higher demand.
Higher Rent Potential: An attractive exterior can justify a slightly higher rent price, as tenants will associate the quality of the property with the attention given to its appearance.
Recommended Improvements:
Exterior Painting: Freshly painted exteriors or doors can immediately elevate the look of your property.
Landscaping and Lighting: Trim the hedges, plant flowers, and add outdoor lighting to create an inviting atmosphere for prospective tenants.
Conclusion:
Property improvements are one of the most effective ways to increase rental income, attract better tenants, and enhance the overall value of your investment. Whether you’re updating kitchens and bathrooms, adding energy-efficient features, or creating attractive outdoor spaces, these upgrades can lead to higher rents and greater long-term profitability. By carefully selecting improvements that align with tenant preferences and market trends, you can maximise your ROI and ensure your rental property remains competitive in a busy market like London.
Thinking about improving your rental property or need help managing your investment? Contact Beechill to learn how our expert property management services can help you get the most out of your investment.
References:
HomeAdvisor, 2022. 2022 Home Renovation Cost Guide. [online] Available at: https://www.homeadvisor.com/cost/
National Association of Home Builders (NAHB), 2021. What Renters Want: The 2021 NAHB Rental Housing Preferences Report. [online] Available at: https://www.nahb.org/
Energy Saving Trust, 2020. How Much Could You Save?. [online] Available at: https://energysavingtrust.org.uk/
Zoopla, 2021. How Gardens Increase Property Value and Rent. [online] Available at: https://www.zoopla.co.uk/discover/property-news/gardens-and-property-value/
Rightmove, 2021. Rightmove House Price Index. [online] Available at: https://www.rightmove.co.uk/news/
U.S. Green Building Council, 2020. The Business Case for Green Building: The Cost of Green Revisited. [online] Available at: https://www.usgbc.org/
National Multifamily Housing Council, 2020. NMHC 2020 Rental Housing Report. [online] Available at: https://www.nmhc.org/
Zillow, 2020. Zillow’s 2020 Consumer Housing Trends Report. [online] Available at: https://www.zillow.com/research/