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A lick of paint: The value of upgrading your rental property

Landlords are being advised to boost the value of their rentals by giving them deluxe refits.

Image: refurb via shutterstock

IT IS SOMETHING of a cliché to criticise landlords for taking little interest in their properties once someone’s paying the rent.

It seems that things have changed in recent times however – with a trend for higher quality finishes on properties leading to better rents and better tenants.

Over the past 18 months, property agency Savills has been advising their clients to upgrade apartments to a higher-end fit out – with an aim to boosting rents.

There has also been the added incentive to landlords of a renovation tax incentive - a scheme that was extended to rental properties by Finance Minister Michael Noonan in Budget 2015.

Rental market upturn

For Sherry Fitzgerald, a company that has been prominent in the Dublin rental market, the trend of return from property improvement has coincided with the upturn in the rental market.

Speaking to TheJournal.ie, Managing Director with Sherry Fitzgerald, Eileen Sheehy, said, “before, landlords were reluctant to spend because rents were on a downward trend and there wouldn’t of been much point – now they see the return from the improvement.”

We would see the market has come back stronger since August 2013 – rents have began to improve again… we would advise our clients to improve their properties as best they can. People now are renting for longer and if properties are in good condition they get higher rents.

For Sheehy, ‘Price Presentation’, where a property is properly presented for its place in the market – is an important part of securing a higher rent.

Rent increases

Savills, who are a prominent letting agent in the Dublin area, has noted an opening of the market for higher end rentals – and have encouraged landlords to aim for “a mix of style and comfort” in refitting their apartments.

One such example of this is a two-bedroom apartment being rented in the central Temple Bar area of Dublin. The property – located on Sycamore Street – has seen its rent increase by 30% since being refurbished.

pictures of flat old Sycamore Street before Source: Savills

While the refurbishment of the property cost somewhere between €4,000 and €5,000 – the owner has seen an increase in rent from €1,150 in 2012 to €1,500 today.

Speaking to TheJournal.ie, Head of Lettings with Savills, Clarie Neary, explained that the type of client in the current rental market has become more long term – and is willing to spend a bit more.

At the moment you are finding that people go beyond one year leases. A lot of people in the rental market are working professionals and they are looking to rent something closer to the city. You notice now that there are a lot of good tenants.

While refurbishments can be favourable for landlords – Neary is aware of tenant’s concerns relating to rising rental costs.

“Not to frighten people in the market because that is not what we’re looking to do. Costing depends on the property and the level that it had previously already been at. In the long term it won’t cost the landlord as much if they maintain the property,” said Neary.

picture of flat new Sycamore Street after Source: Savills

Despite the increase in rent after the refurbishment, Eileen Sheeny feels that much of this is tied to the rise of the rental market – and rent increases may have happened anyway.

There are 40% less properties available than there was this time last year – that is huge. The market is going to push rents up anyways. If properties are located close to bus lines or the DART line, they are always going to pull in good rents.

How much? 

For Sheehy – the amount being spent on a refurbishment project is up to the landlord – and can be done on a fairly tight budget.

I’d say the minimum investment might be €1,000. You can upgrade room by room. Maybe you could look at the kitchen. Paint also does a lot. Change the lightbulbs. Small things like that. Cleaning is a huge part of it. Steam cleaning is important.

“Say you had a two-bedroom apartment – with a two seated sofa, an arm chair, a couple of lamps – thing likes that. You could spend €3,000 on a full refit. Say you were renting a property for €1,400 – you might then get €1,600 for it,” said Sheehy.

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