Smart Upgrades to Increase a Property’s Rental Value in London

Amidst the rising rental prices in London, how can you ensure that your property continues to stay competitive? One way of doing that is through strategic property upgrades.

With the rental prices at the end of 2023 rising as high as 9.2% in the outer areas of London and averaging at 6.9% for the whole of 2023, guests and residents still struggle with affordability issues. But if you can give them a property with a high rental value, you can easily find people willing to pay the rental price you’ve set.

This is why investing in smart upgrades is a great strategy this 2024.

In this article, you’ll be given strategic renovation ideas that can boost the rental value of your property. You’ll also learn why it’s important to invest in your property’s improvement and how it can affect the overall performance of your portfolio this year.

Strategic Renovation Ideas to Improve Rental Value

Thoughtful and well-executed renovations are investments that can significantly grow your portfolio. It goes beyond a mere paint job or improving the furniture and decor. It’s about transforming every rental property into a sought-after haven for guests and residents.

Go through every room of the property to identify the upgrades that can boost the experience of the people who will be staying in it. Don’t let it just be about the visual appeal. Give your guests a complete sensory experience. Make sure the property looks, smells and feels good. Among all the senses, it’s the sense of smell that’s linked closely to our memories. If your unit smells good, people will remember that and associate the positive feeling with your property. That’s one way of getting repeat bookings.

Here are other tips that you can implement in every room of your rental property.

Living Room

The living room is a place to relax. Your goal should be to make it look cosy and entertaining at the same time. Here are smart upgrades you can use.

• Put on a soft rug or carpet. It’ll feel good to tired feet.
• Install wooden floors. It’s a rewarding investment because it adds warmth to the living room ambience.
• Add a fireplace to ward off the usual chill in London – especially during the winter season. It can serve as the centrepiece that adds warmth to the home – literally and figuratively.
• Place lamps in strategic areas of the living room for additional lighting and mood effects.
• Invest in smart home features like programmable thermostats and dimmable lights.
• Set up entertainment systems like a smart TV, sound systems and other gadgets that can be used for entertainment purposes.

Bedroom

If the living room is meant for relaxation, the bedroom is a place for rest. Here are tips that you can implement.

• Have blackout curtains. Give your guests the option to sleep in if they want to. 
• Make the room soundproof – especially if it’s beside a major thoroughfare.
• Add an en-suite bathroom – it’ll make the room feel luxurious because they don’t have to share it with the other occupants of the property.
• Put a walk-in wardrobe – as long as you have the space for it. The storage space will make guests and residents feel more comfortable during their stay.
• Check the insulation. A warm room helps people rest better so check out the windows and doors.

Bathroom

Upgrading the bathroom is one way to significantly add value to your rental property. Here are ideas you can use to upgrade it.

• Add a bathtub. According to Zillow, a bathroom remodel can boost the resale value of a home – even more so than other upgrades you can do.
• Replace old shower fixtures or add new tiles.
• Put a new mirror – something that’s unconventional but still functional.
• Add decors in the bathroom and add a soft bathroom rug for the cold floor.
• Use energy-efficient water fixtures or heated towel racks to give your bathroom a modern feel.
• Add wood elements in the bathroom to give it a spa vibe.

Kitchen and Dining Room

This area holds a lot of upgrade opportunities. The kitchen is said to be the heart of a home so you might want to pay attention to this place. Here are upgrade options for you to choose from.

• Make sure all the kitchen appliances and equipment are functional. If they’re old, upgrade them to energy-efficient alternatives. 
• Change the countertops to match the theme of the property. If you want a country feel, use polished wooden countertops. Polished black granite will suit a luxurious home. Smooth concrete is best for a modern and contemporary kitchen.
• Add a kitchen island if there’s enough space. This will add more seats and storage in the area.
• Give the kitchen cabinets a new paint to make them look new.

For the dining area, you don’t need to spend a lot. Simple upgrades would suffice.

• Change the dining table and chairs if you have the funds for it.
• Put a new tablecloth or runner to change the theme of the room.
• Add table decors to support the mood you’re trying to create.

Outdoor Spaces

Once you’ve gone through the indoor rooms, it’s time to take a look at the outdoor spaces. Not all rental properties have this, but if you have a pocket garden, terrace or balcony, give it some upgrades as well.

The outdoor space is a great way for guests and residents to get some fresh air or sunlight. If it’s facing the front of the property, any upgrade that you can give this space will improve its kerb appeal.

Painting the facade and adding flowers and greenery are only a few of the things that you can do. If there’s space for some outdoor furniture, add it as well. This can be an alternative spot for your guests to rest and relax.

3 Reasons Why Upgrades Boost Rental Returns

Making all the strategic upgrades will significantly add to the growth of your portfolio. You’ll stay competitive and you can demand a higher rental rate because of the higher value that you offer. 

Here are the 3 important reasons why investing in upgrades can boost your rental returns.

Improves Rental Appeal

What matters most in a rental property is how it appeals to the guests or residents who will live in it. You can have the most expensive and modern appliances or equipment but if it’s not what your target tenant needs, they won’t desire it enough to rent the place.

Focus on the functionality and aesthetic appeal that your target guests will appreciate so you can create the environment that will attract them.

Higher Occupancy Rate

With more guests or residents being attracted to rent your property, occupancy rates will surely rise. You’ll have shorter vacancy periods. Not only that, if you impress guests, you might just get them to book the property multiple times.

While this would mean more work when turning over the property, it’s still a good thing. It’ll give you more chances to have the property cleaned and checked for maintenance issues.

Increases Rental Income

If you put the right upgrades on your property, it can attract the right occupants who know how to appreciate them. They’ll recognise the value of the property and that would make them willing to stay in it regardless of the rate that you’ll charge them for it.

Use the upgrades as the basis for the rental increase that you’ll implement. You can add 10% or 20% on top of the current rental fee. The new rental value will play a huge role here – so make sure you know how to calculate it.

How to Calculate the Renovation ROI

To be smart and strategic with your property upgrades, you need to keep the ROI (return on investment) in mind. This will give you clues on how you can get it back through the new rental value and rate that you’ll end up with.

One way to calculate your renovation ROI is by setting a reasonable budget for your upgrades. Check your funds and see how much you can afford. For instance, you have a cash reserve of £5,000. Stick to this budget as you figure out what to renovate.

As you go through every room, list the possible upgrades you can do and rank them by priority. This will allow you to work on the upgrades that’ll bring the most significant impact on the rental value before your budget runs out. Don’t worry about not completing your list. You can always make staggered upgrades over a few years.

Once you have the list of upgrades that your budget can cover, calculate how much rental value will be added after the renovations. Compare it with other properties similar to yours. For instance, properties with bathtubs are priced £300 higher than yours. That can be your rental increase.

You also have to take into consideration the inflation rate or rental price increase that is influenced by the market. For instance, the inflation and rental rate increase in your area is £100.

Given these figures, you can calculate your renovation ROI using the following formula:

Renovation cost / (Rental value + Inflation/Rental Rate increase) = Renovation ROI

£5,000 / (£300 + £100) = 12.5 months

This means you’ll get the ROI for your renovation investment in 12.5 months. If you have no plans of doing another round of renovations, the increase can be part of your rental profit.

Work with Property Experts to Improve Rental Value

Strategic upgrades are the key to improving the rental value of your property and paving the way for higher rental returns. Collaborating with property management experts will allow you to leverage their knowledge and services to unlock the best options that you can get for upgrades. Their expertise can enlighten you about the possibilities that you can take advantage of – thus helping you choose the most cost-efficient upgrades that will have the biggest impact on the rental value.

If you’d like to explore the smart upgrades that you can do for your rental property in London, get in touch with us. Our property experts are ready to assist you in getting the full potential of your rental properties.