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What Does It Cost to Become a Landlord?

With the average buy to let deposit requiring aspiring landlords to put down approximately £64,750, although many will be aware of the potential returns generated through a healthy rental income, fewer may be aware of how much it costs to become a landlord.

What Does It Cost to Become a Landlord? PropertyLoop

What Cost Are Involved With Being a Landlord?   

With agent fees, buy to let mortgage deposits, advertising costs, repairs and potential void periods to navigate, it is essential owners are aware of the numerous ongoing costs that are incurred when letting a property.

How Much Is Landlords’ Insurance? 

Unfortunately thanks to the number of factors that dictate the premium an owner will pay on their landlord insurance there is no exact figure we can provide as an average. With the insurance provider, the number of policies and even the property itself having an influence on the overall expense in order to keep the amount landlords spend on insurance to a minimum the best advice is to evaluate which insurance policies are needed. With this in mind whilst the majority of landlords will hold buildings insurance as a stipulation of their buy to let mortgage, far fewer will own contents insurance, particularly when offering an unfurnished rental opportunity.  

Agency Fees For Renting 

Typically speaking most traditional letting agents will require landlords to hand over around 15% to 20% of their monthly rental income when providing the owner with a fully managed service. As the name suggests the fully managed service sees the letting agent handle every aspect of the tenancy, from finding a tenant to rent collection and property inspections. Whilst a fully managed service is essential for some landlords that have a considerable portfolio, others may need to properly evaluate its cost-effectiveness with referencing, tenancy agreement copies, photography and many other aspects of the tenancy coming at an extra cost to the landlord.  

How Much Is Landlords’ Insurance? PropertyLoop

Rental Advertising Costs   

As can be expected many rental property owners will turn to the local expertise of letting agents to help them find their next tenants faster in an effort to prevent void periods. Whilst it is worth noting that the more experienced landlords or those that enjoy taking a more hands-on approach could certainly take the initiative and try and market their property, as the major online letting platforms are exclusively available to agents, these efforts may be in vain.  

Commonly landlords will choose what is referred to as a let only service, meaning that the letting agents will assist the owner in finding new tenants for the rental. It is worth noting that in the majority of instances the let only service is exactly that, seeing the agents help the landlord find their new tenants and nothing more, neglecting to provide them with assistance during the referencing process, deposit protection or provide an agreement without additional charges being incurred.  

Typically, this service will be priced as a flat fee by some letting agents, seeing the landlord pay around two to three weeks’ rent for the let only service. Perhaps less common when only seeing the letting agent assist in the search for tenants, but it is not unheard of for owners to pay their agent a cut of their first month’s rental income, commonly around 10%.  New call-to-action

Void Periods   

Perhaps one of the greatest apprehensions of those that let out a property, void periods can be distressing for landlords and their finances. Although unlike buy to let mortgages and the various landlord insurance policies a void period is not an additional expense for the landlord, but rather the lack of rental income seen through a vacant property means owners feel the impact of these common fees all the more. With no tenants in the property to periodically provide the landlord with a rental income, mortgage repayments, insurance fees, management costs, advertising fees and the charges that come with repairs and maintenance of the rental property will all come directly out of the landlord’s pocket.  

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