Offer your tenants the right combination

The best way to fill new property is to keep the rent low, writes Chris Partridge
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The Independent Online

Investors easily get carried away, looking at the show flat in a new apartment block and listening to the patter outlining the top-end rents the development will command.

But reality bites when the flats are finished and the mortgage payments kick in. Then landlords find they are competing for tenants with the development's other investors, offering identical products at the same rents.

The problem is particularly acute in recently comprehensively developed areas, where landlords can compete with many flats in other developments as well.

In Sheffield, for example, landlords are struggling, says Jayne Shelley of local agent Winkworth. "There are new apartments everywhere in the city centre, but Sheffield does not have the young professionals to rent them," she says. "Some have sat on the market for weeks or even months."

She says an expensive city centre flat will rent for up to £300 a month less than a cheaper family house in the suburbs.

The situation is better in bigger cities with vibrant centres. But buyers in new blocks must still work hard.

The first thing to do is ensure the flat offers the right combination for the expected tenants, says Jane Ingram, lettings manager at Savills.

"Wooden floors are still hugely popular, and if there is not enough storage have more built in," she says. "A lot of blocks have optional parking and storage spaces below and landlords should resist the temptation to use them themselves."

The choice of furniture depends on whether the flat is furnished or unfurnished.

"In one- or two- bedroom flats, where most of the demand is for furnished accommodation, you need to get a quality furniture pack," Ingram says.

But even unfurnished flats need to be dressed up to let, as the average tenant often fails to see the cosy home potentially on offer.

"If you have bought a larger unit the demand is mainly for unfurnished accommodation, but even then you need to dress it out, perhaps with hired furniture plus ornaments," Ingram advises.

Mason Brooks, lettings manager at Hurford Salvi Carr in Limehouse Basin, advises landlords to concentrate on blank spaces.

"The general appearance and specification of kitchens and bathrooms of apartments in a new development is often very similar," he says. "Where the owner of a new-build apartment can have an impact is in the furnishing of the bedroom and living areas.

"Good-quality durable leather sofas and chairs impress tenants and last longer. Combine these with a sleek coffee table and rug to create a space for relaxation, and hang curtains [for] privacy and warmth."

Brooks says gadgets don't add value: "Expensive home entertainment systems are not necessary to attract tenants, and as they don't add to rental income, additional costs won't be recovered."

Vanessa Evett, lettings manager for Knight Frank in Canary Wharf, disagrees. "You can demand extra for gadgets such as a big plasma screen, DVD player and so on," she says.

But all agents agree the most effective way to attract interest is to cut the rent.

"The most obvious move is to have it more competitively priced than the others," Jane Ingram says.

She says landlords' expectations are often set too high by sales hype, and when flats reach the market they may be surprised.

"Because you get so many flats coming on to the market at once, selling agents predict rent levels that are usually unrealistic," she says. "If you reduce the rent by £50 to £100 a week it is still better than having it standing empty."

The first to cut demands will hook the first tenants, leaving competitors to hang on for higher-rolling tenants, Vanessa Evett says. Even then, market forces may make them cut prices anyway, so they lose twice. "Rents often go down when the market is established," she says. "This happened in West India Quay recently when flats were originally rented out at £800, and since went down to £600."

But when the first tenant has been and gone, the going rate may be established and setting the next tenant's rent will be easier, she says. "You [can usually] increase the rent after six months and even if the tenant stays put there is a rent review after a year."