Tighter Rules For Landlords
One Number Every Landlord Should Know
With the UK Renters Rights Act and The Rent Restriction Act in Jamaica reshaping what landlords can and can’t do there’s never been a more important time to know your real numbers.
Which brings us back to Sarah
Last week we took a peak into Sarah landlord’s life.
She thought her rental was making £12,000 a year, not bad. Then she sat down and looked at the real numbers; mortgage interest, insurance, agent fees, repairs, safety checks, the boiler that has a personality of its own and discovered her actual profit was closer to £3,100.
Not £12,000. £3,100!
She put her biscuit down.
This week, we’re going to help her and you figure out what that number actually means.
Your money is a worker you’ve hired.
Here’s a simple way to think about it.
When you bought your rental property, you sent your money out to do a job. Deposit, legal fees, buying costs, let’s say that was £100,000 of your money going to work.
Now here’s the question nobody asks often enough:
Is that worker pulling their weight?
Because that same £100,000 could have taken a different job. A pension fund. A savings account. A stock market account. Something with no tenants, no boiler, no 8pm phone calls. Those options are paying somewhere between 4% and 6% right now and they don’t require you to do anything at all.
So for property to make sense, for all the effort, the risk, the regulations, the occasional surprise your money needs to be earning meaningfully more than the easy alternative.
That’s where the number 8% comes in.
The 8% checkpoint
8% isn’t a magic number. It’s simply the point where property starts to justify itself.
Below 8%, your money might be working harder than it needs to for a return it could earn somewhere far less stressful.
Above 8%, your property is genuinely earning its place.
So how do you calculate it?
It’s simpler than it sounds.
Sarah’s real return in round numbers
Sarah invested £100,000 to buy her rental property. Deposit, legal fees, all of it.
Her real annual profit - after every cost - turned out to be around £4,000.
So her return looks like this:
£4,000 profit ÷ £100,000 invested = 4%
Four percent.
Not terrible. Not nothing. But well below 8%.
Which means her money is working, just not as hard as it could be.
And now that she can see it clearly, she has choices. That’s the bit most landlords never get to, not because the situation is hopeless, but because they never do the calculation in the first place.
A quick check for your own property
Three questions worth asking yourself this week:
Do I know my real annual profit after every cost, not just the mortgage and the rent?
Do I know how much money I actually put in to buy the property?
Have I ever divided one by the other?
If the answer to any of those is “not really” you’re not alone. Most landlords haven’t. And it’s not because they’re not smart. It’s just nobody sat them down and showed them how or why.
Next week Sarah sits down with the real numbers. All of them. It’s going to be a moment.
A small thing I’m putting together
This summer, I’m hosting a 2 hour Working Brunch a small intimate group of landlords and property managers, my garden, good food and as much fun as I can make it.
A morning getting properly clear on what your rentals are actually producing and what your numbers are telling you.
We’ll do exactly what Sarah did. Together. With better biscuits, even a brunch.
If that sounds like your kind of morning, reply to this email and I’ll send you the details.
Not ready to wait for the brunch and want a closer look at your own numbers now?
👉 Book a free 15-minute consult with your financial Ally.
A quick look at your situation, no pitch, no pressure, and a written personalised next step just for you.
📩 ally@businessbright.co.uk
Free spaces for the 15 minute consults are limited each month, so grab one while they’re there.
🏡 Property Profits Newsletter by Ally O’Meally-Watson
I am your financial Ally, a CIMA-qualified management accountant specialising in property. CIMA isn’t your typical accounting qualification, it’s built around business strategy and profitability, as well as tax returns. In plain English:
I don’t just tell you what you owe in taxes, I help you make sure your property is actually making you money.
I work with landlords and small businesses in the UK and Jamaica.
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