If your rental property is starting to show its age or struggling to attract quality tenants, you may be facing a familiar dilemma. Do you invest in renovations, or do you reduce the rent to stay competitive?
It’s a common question among property owners, particularly in a market where tenants are value-conscious and have more options than ever before. While lowering the rent may seem like the quickest solution, it’s not always the most profitable one in the long term. Likewise, renovating without a clear strategy can lead to unnecessary costs with little return.
At FMS Sales and Leasing, we work closely with landlords navigating this exact decision. Here’s how to assess your property, weigh the costs and benefits, and make the right move for your investment.
When reducing the rent makes sense
Reducing rent can be the right option in certain situations, especially when the issue is market-related rather than property-related.
If similar properties in your area are leasing for less, your rental may simply be overpriced. This is often the case in areas with increased supply, seasonal slowdowns, or shifting tenant demand. A modest rent adjustment can help your property remain competitive and reduce vacancy periods and this can be far more costly than a small monthly reduction.
Rent reductions can also make sense if:
- Your property is generally well maintained but lacks premium features.
- You are targeting affordability-conscious tenants.
- The cost of renovation would outweigh the potential increase in rental income.
- You need to secure a tenant quickly to maintain cash flow.
It’s important to view rent reductions as a strategic adjustment, not a default solution. Repeatedly lowering rent without addressing underlying issues can erode your property’s perceived value and long-term returns.
When renovation is the smarter investment
If your property is being overlooked despite competitive pricing, the issue may be its condition rather than the rental.
Outdated kitchens, worn flooring, tired bathrooms, poor lighting or neglected outdoor areas can all deter prospective tenants, even at lower price points. Today’s tenants expect clean, modern, and functional spaces, particularly if they’re committing to longer leases.
Renovation is often the better choice if:
- Your property sits vacant longer than comparable units.
- Prospective tenants view the property but don’t apply.
- Feedback consistently points to the same issues.
- You want to attract higher-quality, longer-term tenants.
- You are planning to hold the property as a long-term investment.
Remember, renovation does not have to be a full and costly overhaul. Targeted upgrades often deliver the best return.
Renovations that deliver the best return
Some improvements consistently make a difference without breaking the bank. A fresh coat of paint in neutral tones can instantly modernise a space. Updated lighting too improves ambience and functionality as well as the addition of modern fixtures and fittings like taps, handles, and switches.
Kitchens and bathrooms remain important rooms in the home, so even minor refreshes gere can have a strong impact. Finally, improved curb appeal, including gardens and entrance areas can boost first impressions.
These upgrades can justify higher rental rates, shorten vacancy periods, and reduce tenant turnover which all improve your net return over time.
The real cost of vacancy
One of the biggest mistakes landlords make is focusing only on monthly rental income, rather than the cost of vacancy.
A property standing empty for two or three months often costs more than a well-planned renovation or a strategic rent adjustment. In addition to lost income, vacancies can lead to higher marketing costs, increased wear from multiple viewings, and greater stress overall.
The goal is not simply to fill the property, but to attract the right tenant at the right price.
In many cases, the best solution is not strictly renovation or rent reduction, but a combination of both. A small upgrade paired with a realistic rental price can position your property perfectly within the market.
At FMS Sales and Leasing, we assess each property individually, considering location, condition, demand, and comparable rentals. Our aim is to help landlords make decisions that protect their asset, maximise returns, and ensure sustainable occupancy.
Get in touch with our team for expert advice on your rental property.
