Increasing UK Rental Market Revenue Without Raising Rent

Unlocking Additional Revenue: The Power of Ancillary Income in the UK Rental Market

As a savvy property owner in the UK rental market, diversifying your revenue streams is not just smart—it’s essential. The concept of ancillary income has been a game-changer in the US rental sector, spearheaded by specialised departments known as ‘Ancillary Services’. It’s time for the UK market to embrace this lucrative trend.

Understanding Ancillary Income

Ancillary income represents the supplementary revenue streams that bolster your primary earnings. In the realm of property rental, it encompasses all income sources outside the traditional rent charges. When effectively harnessed, these additional streams can contribute significantly to your financial portfolio, often accounting for 10-20% of your total income.

This article is your comprehensive guide to the myriad opportunities for ancillary income, tailored for stakeholders ranging from build-to-rent developers to private residential landlords and student accommodation providers.

  1. Direct Selling (Bulked Services)

In an era where convenience is king, offering amenities like high-speed broadband can set you apart. Leverage your position as a bulk buyer through Centralised Procurement to secure competitive rates, benefiting both you and your tenants. It’s crucial, however, to structure these services as optional add-ons rather than embedding them in the rent, 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: A Green Initiative

The shift towards sustainable living is undeniable. Utility rebilling is not just an eco-conscious move; it’s a financially astute one. By promoting responsible utility usage, you’re not only contributing to a greener planet but also fostering a culture of sustainability among your tenants.

  1. Referral Income (Commission-Based Opportunities)

Marketing to your tenant base can be challenging for external companies, but your endorsement holds significant weight. Collaborate with service providers, from broadband to insurance, and earn commissions by becoming their point of referral. This approach not only diversifies your income but also enriches your tenant’s living experience.

  1. Supply-Chain Rebates

Your relationships with suppliers and service providers are invaluable. Through Centralised Purchasing, your bulk transactions can yield rebates or discounts, rewarding your business and enhancing your negotiation leverage.

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: Maximising Every Square Foot

If you are a PRS, BTR, and/or a PBSA manager, beyond residential units, your property holds untapped potential. 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.

Partner with Fjeld Consulting

At Fjeld Consulting, we’re dedicated to helping you unlock the full revenue potential of your property. Our bespoke strategies are designed to identify and capitalise on ancillary income opportunities, ensuring your investment yields optimal returns. Contact us to explore a tailored, risk-free approach to augmenting your rental revenue.

About the Author: Dustin Fjeld

Dustin Fjeld
As founder member of Fjeld Consulting, Dustin has helped save clients thousands across a range of BTR, PBSA, PRS and Co-living portfolios.

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