Fjeld Consulting Limited HomepageFjeld Consulting Limited

Private Rented Sector Services

  • Our Services
  • Contact Us
  • Newsletters
  • Client Login
How to Boost UK Rental Market income without increasing rent?

How to Boost UK Rental Market income without increasing rent?

September 4, 2017 by Dustin Fjeld 3 Comments

As a residential property owner operating in the UK rental market, there are many ways that you can supplement your rental revenue with additional income. The US rental market has capitalised on these types of opportunities for years, creating specialised departments called ‘Ancillary Services’, but this is yet to take place here in the UK.

What Is Ancillary Income?

Ancillary Income is additional revenue that supports your main source(s) of revenue. In the rental market, this is essentially any type of income that is not included in the rent you charge your tenants. If you identify enough opportunities and capitalise on them, ancillary income can end up constituting 10-20% of your overall revenue.

In this article, we will explain some of the biggest ancillary income opportunities which apply to you whether you are a build-to-rent developer, a private residential landlord, or a student accommodation provider.

 

  1. Direct Selling (Bulked Services)

Tenants like to have access to modern conveniences such as lightning-quick broadband, so you could look to provide it for them. Given your position as a bulk-buyer, via Centralised Purchasing, you will be able to negotiate on prices with suppliers, which means that your tenants will also enjoy cheaper prices. In this line of income, the owner buys services for all residents and then resells the services to the residents for less than they could buy on their own, but at a premium to the negotiated rates.

Note: These services should not be included in the monthly or weekly rent that you charge your tenants, and this is for several reasons:

  1. It will price your units higher than the competition
  2. You will miss out on some market traffic due to being higher than market pricing
  3. It will eventually become an operating expense that the next regional manager will want to cut
  4. If for whatever reason, the service goes down for technical reasons, you will only need to give tenants broadband credit as opposed to a rent credit

Therefore, we recommend that it becomes a new fee that is discussed and sold to all residents during the leasing process and is memorialised in a lease addendum.

Whatever you decide to offer, adopting this tactic and making it work for your business will result in a steady flow of ancillary income for you, and if the service is great it should also increase your popularity among tenants – thereby making them more likely to renew once their leases are up.

 

  1. Utility Rebilling

Like it or not, utility rebilling is coming to the UK (even PBSA). Our Earth has limited and dwindling resources, so greener living is just the right thing to do.

Utility companies, government agencies, investors, and even residents will actively push for green strategies. Studies show that billing utilities reduces usage by 25%!

 

  1. Referral Income (Commission)

Marketing to your residents is difficult. Your support as an owner, manager, or agent is powerful, and many companies will pay finder’s fees for your effort.

For instance, let’s say you’re a build-to-rent developer. You could approach service provider with the proposition that they become the sole provider of TV and broadband within your building. By bringing this business to the service provider, you are entitled to ask for a commission.

Similarly, you could approach an insurance company to see if they would be interested in becoming your building’s sole provider of renters’ insurance.

You could also offer concierge services such as cleaning, laundry, dry-cleaning, dog-walking, and more.  Most partners would be happy to give a discount and pay a commission to be your exclusive provider with some marketing support from your team.

 

  1. Supply-Chain Rebates

If you have suppliers or manufacturers that you work closely with – such as furniture retailers or maintenance companies – you can leverage Centralised Purchasing in order to achieve rebates (or at least discounts).

Think about it: Via Centralised Purchasing, you buy all of your building’s furniture from one company, or you send all maintenance work to one company, you are enormously benefitting these businesses – so shouldn’t you be rewarded for this? You should, and you can be if you make your case clearly and you know how to negotiate.

 

  1. Other Rent

If you are a PRS, BTR, and/or a PBSA manager, it’s not just apartments and living quarters that you can make rental income from. You can rent other spaces out to various people and organisations.

Do you have roof-space that could house mobile-phone masts? Do you have parking facilities? Do you have communal spaces or conference rooms that you could rent out for functions or events? Do you have space for vending machines (which you will charge the providers rent on)? These are all big Ancillary Income opportunities.

 

Contact Fjeld Consulting

Need help in maximising the revenue potential of your property? Here at Fjeld Consulting, we can help you do exactly that. We will work with you to identify ways in which you can earn ancillary income to augment your rental revenue under a no risk model. Get in touch with us to talk through your options.

Filed Under: Build to Rent Tagged With: Ancillary Income, Build to Rent BTR, Centralised Purchasing, Internet, Other Income, Private Rented Sector PRS, Purpose Built Student Accommodation PBSA, Rubbish

Comments

  1. Steve Hallsey says

    September 5, 2017 at 7:45 pm

    Too often, as operators of real estate, we focus so heavily on base rent that we let thousands of dollars slip through our fingers because we don’t focus on the things you’ve outlined in your article. It is when operators focus on all sources of revenue that they have the greatest success.

    Reply
  2. Greg O'Berry says

    September 6, 2017 at 4:43 pm

    Great checklist of potential ancillary income sources! You are a wealth of information and assistance for UK property owners Dustin!

    Reply
    • Dustin Fjeld says

      September 6, 2017 at 5:12 pm

      Thanks, Greg, as far as I’m concerned you are the Granddaddy of Ancillary Services.

      I still remember trying to clean up your first property wide Wi-Fi agreement started in 1999 and out by 2001. I bet the speed was less than 100kbps and we were happy to have it.

      Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Copyright © 2021 Fjeld Consulting Limited · Company Number 9963001 · The Registrar of Companies for England and Wales
Georgian House, 34 Thoroughfare, Halesworth, Suffolk, IP19 8AP · All Rights Reserved · Privacy Policy
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish.Accept Read More
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled

Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

Non-necessary

Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.