As we enter a new year, combined with the upcoming end of the tax year, this is a perfect opportunity to review your portfolio to make sure it is working hard for you. Some areas for consideration are below.
Review each of your properties individually. What is their general condition and what major works are likely to be required in the next 12 months? A few specific areas:
- Is the boiler getting old? Have you had multiple call-outs recently and would it make sense to replace?
- What is the general decorative condition of the property? Does it need redecorating? If so, can it be doe now with a tenant in place (maybe long with a rent increase) or can it wait until the tenant moves out.
- How much maintenance work has been required on the property during the year? Are there any issues that can be resolved such that they do not keep recurring (e.g. new boiler, new roof) to save money in the longer term.
How much cashflow is each property generating? This can be done at the same time as your tax return. If a property is losing money, is it due to a temporary issue (e.g. having to do one-off repairs during the year) or is it just a dog of a property in which case would selling and reinvesting in a better property be feasible?
Is the mortgage on each property at the best rate? If not, would it make sense to go to a another provider (after taking into account switching costs)?
Which mortgages are coming to the end of their teaser rate? What type of refinancing will you be considering (fixed or variable, how long to fix for etc..)
Are rent levels reasonable for all your properties? If rent on a property is lower than market, should you consider increasing the level? See the blog post on increasing rent here.
Are all your properties adequately insured? In particular, does the insurance company have the correct information regarding the type of tenant (if they have changed mid year fr example). Are the rebuilding costs still accurate for buildings insurance (or have you been using the same figure for many years which will have been eroded by inflation)?
If you are using your own tradesmen, are they properly accredited? If you haven’t checked their accreditations and insurance recently, you should ask them to reconfirm, to make sure that you are protected.
Are you still getting goof value from your tradesmen? Or are they slowly increasing prices without justification. It is not unheard of for landlords to get complacent with a “trusted” tradesman who slowly but surely increases their charges unreasonably.
Have you got a good tax adviser who is giving advice on property tax specifically. In particular are you aware of S24 and its implications? This is a critical issue for landlords and if you are not aware of it, you should urgently be seeking advice. You may consider transferring properties from your name into that of a company. lf so, this may impact how yo buy properties in the future. A good tax adviser is critical
Also are you making all allowable deductions on your tax return? Again, a good tax adviser can help with this.
Is your letting agent delivering value? What fee are you paying them and how does it compare to the market? Are you getting a discount if they have multiple properties from you?
Are they taking commission from tradesmen? – if so do you know how much and are you happy with it. Are they carrying out inspections (and giving you written reports) as agreed?
While a many f the things listed above should be done on an ongoing basis, it is always worth sitting down once a year going through to ensure that you are maximising your returns from your property portfolio.