The Costs Involved in Letting a Property

The Costs Involved in Letting a Property

A Landlord will incur a number of different costs when letting a property and it’s important to budget correctly in order to avoid any surprises.

  • Letting Agent Fees
  • Income & Capital Gains Tax
  • Maintenance
  • Landlords Insurnace
  • Safety Certificates
  • Unpaid Rent & Voids
  • Contingency Fund

LETTING AGENT FEES

Choosing the right letting agent is important they are experts in their field and can make life a whole lot easier for a landlord.

The degree of service provided will dictate the price which will usually be a percentage of the rental income. The services provided by a letting agent will range from marketing of the property, finding potential tenants, collecting rent and full property management including dealing with repairs.

INCOME & CAPITAL GAINS TAX

Landlords will be subject to paying income tax on all rental income and they may have to pay capital gains tax on any profits made if the property is sold.

  • MAINTENANCE

As a landlord, you will be obligated to maintain the property in a functional state. Many of these costs are tax deductible. Some of the costs you may incur are:

  • Repainting
  • Replacing / maintaining boilers
  • Gardening
  • Replacing Water pipes

LANDLORDS INSURANCE

Landlords insurance comes in a three different tier packages:

  • building insurance: this covers the structure and protects against flood and fire damage.
  • contents insurance: this is relevant to rental properties and covers any contents included in the property (all of which should be outlined in the tenancy agreement).
  • landlord liability insurance: this covers landlords should a tenant or visitor be injured in the property where the landlord is deemed responsible.

As well as these policies landlords can set up rent guarantee insurance to cover them against unpaid rent. Some policies also offer cover against potential legal expenses and home emergency cover to ensure core utilities, including gas and water, are quickly restored after an outrage.

SAFETY CERTIFICATES

As a Landlord, you will be required to ensure that the electrics & appliances in the property are safe. You will also be required to keep any relevant safety certificates e.g. gas to prove that the property meets legal safety standards.

Energy Performance Certificates (EPCs) also need to be kept up-to-date. Each EPC is valid for ten years

UNPAID RENT & VOIDS

Although David Astburys will work to ensure that void periods between tenants are minimised, it is unsafe to assume that you will receive rent from your property 365 days a year. An experienced Landlord will generally budget for receiving around 90% of potential rent throughout the year. This is due to the property being vacant between tenants.

CONTINGENCY FUNDS

Always budget for a contingency fund by putting a little of each months rent aside. This will help to cover any unexpected expenses.