Before you start oohing and aahing over hand-painted kitchens and copper baths on Houzz.co.uk, pause and ask whether you should renovate your rental property at all. There’s no doubt that the right refurb can add value, but the reality of building works is far from romantic. It involves lots of dust, almost as many decisions and double the stress, time and money you’d expect. Don’t do it lightly.
Revisit your goals for your property (refer to previous blog post ‘How to avoid the No.1 landlord mistake’): whatever you do should tie in with them. Plus, it should make more money than it costs – lost sleep and lost rent included. That new kitchen or bathroom will take years to recoup through raised rent, but there may still be good reasons to go ahead, such as to:
- Increase the sale price if you’d like to sell soon
- Up the property standard so it attracts better tenants and rents faster
- Add a bedroom – done properly, this will add both rental and sales value
- Tackle a big maintenance problem
- Maximise the property’s potential, raising both the rent and the long-term capital value.
For the record, these are not good reasons to renovate:
- Everyone in the street has done a loft conversion, so we should too
- I’ve always wanted that dream bathroom
- The kitchen is perfectly functional, but so eighties
- Wouldn’t it be nice to have a more natural light?
When it comes to spec for rental properties, there are two big newbie mistakes. The first is to choose finishes of the same standard that you’d have liked. Look at comparable ‘let agreed’ properties on Rightmove and Zoopla and use their finishes as a guide. For all except top-end rentals, durability and functionality are all that matter. Tenants won’t fork out for bespoke built-in wardrobes or marble fireplaces. To them, the most important factors are location, rent and space – though it’s about having just enough space for their needs, unlike homeowners who want as much space as possible. Only 15% of private tenants have two or more spare bedrooms, compared to almost 50% of people who own their homes, census data shows.
And the second mistake? That’s easy – don’t impose your taste. Keep walls white, floors neutral and ceilings clear of taxidermy chandeliers, however trendy they may seem. Most tenants simply want clean and bright.
Pardon the sermon, but too many people get this spectacularly wrong. When deciding if and how to do a refurb, do it with the mindset of an investor – not a homeowner. Unless, of course, you’re planning to move back or sell soon, in which case your preferences or those of your target buyer become the most important.