THE LETTING COSTS OF BUY TO LET

There many costs involved in any Buy To Let project and you should make sure you are aware of them all. Some costs are major costs and while others may be smaller they will all add up.

To be comfortable with your buy to let property portfolio, even if it is just one investment property, you should be aiming to achieve an actual rent, which is about 35% more than your mortgage repayment. This should allow you to cover most costs with a little bit to spare.

Repairs and Maintenance

Probably your biggest ongoing cost especially if things happen which you are not expecting. It always pays to do preventative maintenance on a regular basis rather than wait for something to break and than receive a hefty repair bill.

Gas and Electric

It is a legal requirement that every year all gas and electrical appliances in the rental property must be professional examined by authorised personnel to ensure that they are in good working order and meet stringent government safety checks.

Furniture and Fittings

Replacement and/or repair costs for anything that breaks or wears out will have to be taken into account if you are letting your property furnished.

Letting Agents Fees

Typically a letting agent will charge you about 10% of the gross monthly rent when you let to a tenant they have found for you. If you want their full property management service that will usually cost you another 5% of the gross monthly rent.

There may be separate charges for the Condition and Inventory Report check-in and check-out service, which may actually be done by a different specialist company.

Ground Rent

If your rental property is a flat or apartment or any other leasehold property then you may have to pay ground and service charges. They are not likely to be large but you will still need to budget for them.

Buildings Insurance

You will need to buy and maintain buildings insurance on your rental property at al times. This will be the main buy to let insurance cost you have to purchase. Some specialist insurance companies offer a landlords insurance, which will combine many of the insurance needs of a buy to let landlord.

Contents Insurance

Contents Insurance will be needed for any items you own which are left in the rental property for use by the tenants. It is usually part of a landlord’s insurance policy.

Legal Insurance

This cover is not a necessity but will cover your legal costs if you have to evict a tenant for non-payment of the rent. Such legal costs would normally be quite expensive.

Costs to Forget About

When you let your property in the UK the tenant is responsible for paying Council Tax, all utilities including electric, gas, water and their own phone and TV bills.