Innovative Ideas to Secure Tenancies for Your Buy-To-Let Property
If you are finding it difficult to get new tenants or want an innovative way to retain your existing tenants, you might consider offering incentives for good tenants. There are many types of incentives that you can offer. These include:
- Upgrades on appliances
- Flexible lease terms
- Allowing pets
- Council tax included in the rent
There are also financial incentives you may offer. These include rental incentives, discounted rents, and rent refund programmes. These can be innovative and tempt good tenants to stay longer. Here are four rental incentives for good tenants that you might consider.
1. First Month Free
Sounds a bit radical, doesn’t it? Why on earth would you offer the first month free? If your property has been vacant for a while and you are finding it hard to find good tenants, this might be the offer that tips the scales in your favour. While you forego the first month’s rent, you do benefit from having tenants in your property:
- They pay the council tax
- The utilities go in their name
- Being occupied, you are less likely to suffer from vandalism or squatters
2. Early Months Rental Discounts
This is a little like low start interest mortgages. You offer the new tenant a discounted rental price for the first three months, and then the rent reverts to the market price. This tactic can be used to attract new tenants or reward existing good tenants.
If you are considering this, you’ll need to get your calculator out. Work out all your costs and how much discount you could offer and remain profitable. If this encourages a good tenant to stay or helps you obtain a new tenant more quickly, it could boost your rental buy-to-let profit.
3. Early Payment Discount
Tenants who pay on time are among the best tenants a landlord can have. Those who pay early are worth a tick or two on your cash flow chart.
Late payment costs you. You might fall into an overdraft because of late rental payment. The bank will charge you: they don’t care that being in the red is not your fault. Plus, there’s the time and energy cost, as you spend hours emailing and phoning and chasing your tenant for the rent they owe. You must juggle your money to make sure your buy-to-let expenses are paid.
An early payment discount might be enough to turn late payers into early payers. Let’s say that the rent is normally due on the 28th of each month. You might offer an early payment discount of £25 if the tenant pays on the 21st of each month.
The trick to making this incentive work is to make it big enough to be attractive without making it so big that it harms your profit. You will also need to ensure that the deal is in writing and signed so that there can be no disputes.
4. Rent Refund
This may be the most radical of all rental incentive ideas. You’ll need to keep good records, and again make certain that the agreement is in the form of a legal contract. Here’s how it works:
- You let the tenant know that each time they pay their rent a week early, they will earn a refund
- At the end of the year, you repay the tenant the refund they have accrued
- But, to earn the refund, all rental payments over the year must have been paid early or on time
Should You Offer Rental Incentives for Tenants?
I’m a fan of keeping things simple. I prefer to charge the right rental amount to tenants. If a property is in a void period, I prefer to make a straight reduction in rent. However, in some cases be a little more innovative with the rent you charge and how you charge it may help to secure good tenants and keep them longer – provided they are used in conjunction with good property management and vetting the tenants comprehensively.
The buy-to-let market is continually innovating. As a landlord client of Ezytrac, you’ll be among the first to benefit from market innovation and the latest in new thinking that attracts and retains great tenants. To learn more, contact Ezytrac today +44 0 1522 503 717.
Live with passion
Brett Alegre-Wood