Letting a property comes with an array of financial and legal responsibilities. If you're not on top of your obligations, you could lose money or wind up in court (or both).
So as a landlord, you need to be realistic about the costs you may encounter when letting out a property and in this article we outline some expenses associated with a rental property.
For many Landlords mortgage repayments are the most significant monthly outgoing. If you're looking for certainty about the size of your monthly repayments, opt for a fixed-term rate.
Landlord insurance is a condition of most buy-to-let mortgages. There are a number of products available and dependent upon the cover you choose will determine what you pay.
Maintenance and repairs
All properties will require general maintenance from time to time. As a Landlord you are obliged to provide a property that is safe (eg maintaining gas and electricity safety checks) and is in a habitable condition. A number of property experts suggest between 5% and 10% of annual rent should be set aside as a pool to draw from.
Service charges and other fees
For property in an apartment block service charges or ground rent may be payable. Leasehold property owners may also have to contribute to the cost of work carried out in communal areas.
Reduction in income
Be prepared for periods without income, despite all best efforts a property may become empty for a short period between tenancies. It's also possible that a tenant could fall behind on the rent especially in current times.
Regulations are constantly changing, so do your research and keep all relevant receipts and paperwork and ensure you pay what you should, and claim that to which you're entitled.
Sourcing a Tenant
Some DIY landlords do this themselves, but most good landlords leave it to the pros and use an experienced letting agent. The DIY route will save you some money upfront – but it could cost you much more in the long run. A good letting agent will have years of experience at sourcing good tenants, checking references and protecting deposits.
As a landlord you could save this money by doing the work yourself but there will still be a cost to you in terms of time and energy.
Paying a letting agent to handle the big and little stuff may be more important to you as they will look after the paperwork, the people management, the legal checks, the inspections, manage any repairs or maintenance and any disputes.
So, as you can see letting a property is more than signing an agreement, handing over the keys and collecting the rent each month.
Here at MARTIN & CO, we can take the stress out of managing a rental property, so you can sleep easy at night. Get in touch if you have any questions, we're here to answer your queries.