Landlords considering refurbishing a property? Here’s what to look out forMake Text Bigger
As 2016 comes to a close, many landlords will be reviewing their portfolios in order to find ways to protect their profits in response to a number of changes to the private rental sector this year.
While some landlords may consider selling unprofitable properties, other options of improving profits could be to extend portfolios or refurbish a rental property.
Landlords could add 1-2 bedrooms, an additional bathroom or update a kitchen.
An extension is also often more cost-effective than buying a larger home. This can also be a beneficial option because no stamp duty or estate agent’s fees need to be paid.
Refurbishment is an opportunity for landlords to use the space creatively and can raise the capital value and rental value of the property.
“Refurbishing a property can increase its value, which is beneficial for landlords if they decide to sell their buy to let in the future. In the meantime, it can help to attract higher quality tenants who are more likely to stay in a property for a longer period of time,” said a spokesperson for Property 118’s landlord insurance provider Discount Insurance.
Expenses associated with refurbishing a buy-to-let property are tax deductible and will either be treated as repairs or capital expenditure.
Repairs are deductible from rental income while capital expenditure is tax deductible only when you go on to sell the property.
Examples of capital expenditure include adding an extension to the property, doing a loft conversion or putting in central heating to a property that previously did not have this feature.
Below are a few dos and don’t put together by Armistead Property for when refurbishing a buy to let property:
- The kitchen and living areas are usually the most important rooms for many people so try to focus on improving these areas.
- Try to keep things white, clean and modern as people have different personalities and tastes meaning that an overpowering design could potentially put some people off. Keeping a blank canvass is good but try to add subtle colours so that the property is not cold and uninviting.
- Try to make the property light and airy. If there aren’t many windows then consider painting the walls white and adding more lighting.
- Think about your target market – do you want to let your property to young professionals or a family?
- Don’t forget about the outside of the property! Make sure the front door and garden is smart and well kept.
- Make sure you have all the funds for the refurb work as you don’t want to run out of money half way through the process!
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