To make your buy to let a success, you need to have a realistic idea about the costs you’ll encounter when renting out your property.
Many people have an idea that being a landlord is easy. The assumption is that once a tenant has moved in the only thing left to is collect the monthly rental payments.
However the truth is that letting out your property comes with an selection of financial and legal responsibilities. If you don’t stay on top of your responsibilities or dismiss them could lead you to getting fines or worse end up in court.
Don’t fret that is in extreme circumstances! But here is a list of all the costs in an order of what we expect the most expensive that you can expect as landlord in Medway.
The mortgage repayments you can expect this to be the highest outgoing payment. We work with a local firm who can provide you with the best strategy to get the most out of your property.
Service charges and other fees
If you have invested in a flat within an apartment block, there may be a requirement for you to pay a service charge and/or ground rent. Your conveyancer will talk you through this during your purchase. Another thing to consider it that leaseholders may have to all contribute to the cost of work which is carried out within the block, usually in communal areas or roof.
It would be useful to set aside a bit of money to cover the mortgage and other costs in the period in between tenancies or if the tenant unfortunately falls behind on the rent. If you can it would be a good idea to put between a month to six weeks’ rent to give you enough of a safety blanket.
Maintenance and repairs
No matter the type of property they all will require general maintenance. One of your responsibilities as a Landlord is that you must ensure the property is safe to rent which means keeping up to date with gas and electricity safety checks.
It would be wise to put some funds from the rent to cover the checks and any repairs that may crop up. Many property investments experts suggest putting away between 5% and 10% of annual rent. You can advise your letting agent to do this for you.
Most buy to let mortgage lenders put a condition in the offer that you should get Landlord insurance. You can choose a general sort of policy which should cover the essentials such as property liability, buildings insurance, contents, and loss of rent. Or if you would like take out further cover that can be arranged but just beware that these usually come with a higher price.
The has been a lot changes over the last few years as the Government has tightened up on the rules on what you can and can’t offset. Also there have been changes to income tax, where the tax owed depends on your income levels. The government website is a good place to go to do some research on what you costs you can or can’t claim. It would be good to keep all receipts and paperwork, so you can put the figures in your tax return.
Finding a tenant and credit checks
There are some landlords who like to take control of the process and do it themselves. But the majority of landlords it in the capable hands of an experience letting agent. The do it yourself approach will no doubt save you a bit of money in the short term but could have a drastic impact in the long run if things have not been done correctly. There are over 170 pieces of legislation to adhere to when letting out your property. By instructing a good letting agent will help by finding good tenants, who have undertaken in depth references on the tenants credit, employment and rental history. Another aspect is that due to experience agents are good at spotting rotten eggs before it is too late.
Property management fees
By giving your investment to a letting agent, you allow yourself to rest easy knowing your property is in safe hands. The letting agent will look after all aspects of the tenancy and making sure you stay compliant. There is no obligation to instruct an agent and doing it yourself can save you money but it will cost you in time and energy.
A simple innocent event such as registering the deposit a few days late can leave you massively out of pocket.
Here at Medway Premier Homes, we’re here to assist manage and protect landlords’ property investments. If you've got any questions regarding insurance or anything else please don't hesitate to get in touch.
If you're an existing landlord with us, or not an existing landlord. You could be someone thinking of becoming a new landlord in Medway trying to find advice and opinion drop me an email or call and let’s start a conversation, we are a friendly bunch who can help you.