Is Your Property Still Profitable?

The Key Steps Landlords Must Take to Stay Ahead

How Profitable Is Your Property?

As a landlord, it's crucial to regularly assess your property portfolio. The rental market is changing, and profitability isn't just about collecting rent anymore.

One major change on the horizon is the abolition of Section 21 "no-fault" evictions. While landlords will still be able to regain possession of their properties if they intend to sell (under the proposed Section 8 Ground 1a), there’s a catch. A landlord cannot serve this notice within the first 12 months of a tenancy, and if the property doesn’t sell, it cannot be marketed or re-let for another 12 months.

We recently faced a situation that highlighted the importance of planning ahead. One of our North London flats had long-term tenants, but with a fixed-term mortgage ending and rising repayment costs, we decided to sell. After notifying the tenants and putting the flat on the market, we received no suitable offers. So, we chose to re-let it. If the proposed legislation had been in place, we would have been forced to leave it empty for a year, a reminder of how critical it is to think ahead.

It’s not just legal changes that should make you re-evaluate your portfolio. The end of fixed-term tenancy agreements means less stability in rental income and more unpredictable cash flow.

Now is the time to dig into the financials and identify hidden costs before they eat into your profits.

Smart Ways to Cut Property Costs

Maximising rent is important, but keeping costs in check is just as crucial. Many landlords don’t scrutinise operating expenses, and this can quickly erode profits. A utilities audit can help pinpoint unnecessary spending.

Key Areas to Review:

1. Utility Costs: Stay on top of broadband, gas, and electricity contracts. Rolling onto a standard tariff can mean significantly higher bills. We learned this the hard way. Our broadband cost jumped from ￡35 to ￡72 per month simply because we didn’t check. By switching, we cut it to ￡25 per month.
2. Void Period Management: Council tax during void periods is easy to overlook but can add up fast. Across a large portfolio, just a few unpaid bills can result in unexpected demands.
3. Rent Collection Discipline: Missed payments often go unnoticed until arrears build up. If you use an agent, check your statements and challenge any gaps in rent receipts. Keeping on top of collections is far easier than chasing arrears.

Protecting Your Profits Through Compliance

Compliance isn’t just paperwork, it protects your business, tenants, and cash flow. Failing to meet legal requirements can lead to fines, delays, and possession claims being rejected.

Common Compliance Pitfalls:

1. Tenancy Agreements: Ensure tenants receive all required documents at the correct time. A simple mistake could make a possession claim invalid.
2. Handling Holding Fees: Refunds or deductions must be processed correctly to stay within the rules.
3. Deposit Compliance: Issue the prescribed information correctly and keep proof of delivery to avoid penalties.
4. Gas Safety Checks: Letting a gas certificate lapse, even by one day, can make it impossible to regain possession of your property.
5. Serving Section 21 Notices: Always serve notices with proof, ideally photo evidence or a proof of postage receipt. Email service is risky unless explicitly stated in the tenancy agreement.

These tasks are often seen as “low-value admin” and delegated to inexperienced staff. But with stricter tenant rights on the way, attention to detail can mean the difference between keeping control of your property and losing it. If you outsource, make sure your provider understands the rules inside out.

The changing legal landscape means investor landlords must be proactive and strategic. Profitability isn’t just about rent, it’s about managing costs and ensuring compliance. From avoiding supplier rollover charges to maintaining solid tenancy documentation, small actions can have a big financial impact.

Start with two key questions: “How profitable is my property?” and “Am I fully compliant?” If you can confidently answer both, you’re already ahead of the game.