The true costs of being a landlord
During our journey as a professional residential lettings management company we have worked with a wide range of different landlords, from those renting out an individual property they inherited, to investors with a portfolio of property lets. One thing all landlords have experienced at some stage is the unexpected, which can come in various forms, highlighting the true cost of this otherwise immensely rewarding path.
It’s not uncommon to hear from landlords who have had their fingers burned by unpleasant tenants in the past and are now looking to find respectable renters, with the help of a management agency like ourselves. Damage caused by unhappy or uncaring tenants can prove costly to remedy and isn’t always covered by the deposit, which now must be held in a government-backed tenancy deposit scheme.
A number of wannabe landlords fail to research the subject thoroughly before jumping in, not appreciating the laws that need complying with, often at a price, from energy performance certificates (EPC) and yearly gas safety checks, to legionella assessments and monitoring.
It may give a prospective landlord a warm, fuzzy feeling, to let tenants enjoy relaxing on a sofa purchased a decade ago which still looks in good nick, but Fire Safety Regulations must be met, in which case new furniture may need to be purchased in the case of part or fully-furnished properties.
Tradespeople might have to be used from time to time, to fix flooring, walls, ceilings and gardens, and it may be beneficial to take out boiler cover, as they are costly to replace.
Mother Nature can deliver the unexpected, too, and often at the worst time, from roof tiles blowing off during the Christmas holidays to expanding timber causing doors to stick during unusually hot summers.
Safety is a primary focus for landlords, who will soon be required by law to ensure that mains-wired or wireless smoke and carbon monoxide detectors are installed and working correctly. It is already mandatory for a fire extinguisher and blanket to be present in the kitchen where a HMO licence is required.
Unexpectedly, a tenant may become disabled through an accident, for example, meaning the landlord will be required under the Equality Act 2010 to make reasonable alterations to the property.
Renting out property is viewed in the same light as other businesses, so taxes still need to be paid and in some parts of the UK, local authorities require landlords to obtain a licence. High quality buildings insurance must also be in place, but like with all other costs and expenses, can be offset when it comes to tax.
With rents rising in many regions, landlords who take the time to do research and enter the rental market with their eyes wide open typically find the experience to be an enjoyable and profitable one.