At Holmes Estate Agents, we aim to provide landlords with as much help as we can. We want to make sure landlords know what costs they need to consider when letting property, and if you have any questions or need guidance, please get in touch with us.
If you use a letting agent, and many landlords do, there will be a range of costs to consider. Even the most basic package, where the agent advertises the post, interviews tenants and carries out a credit check will cost money. This assistance is vital because finding the ideal tenant is crucial in being a landlord, but you need to spend money to obtain this support.
However, some landlords opt for a full management service from a letting agent, and this includes a lot more work. This service finds the best tenant, but it also manages the property, collects rent, pays bills and liaises with the tenant. A lot of landlords find this to be an invaluable service, but it is a bill to pay, usually every month.
Of course, it is possible to act as an independent landlord and carry out this work yourself. This work will incur individual costs and running costs, but for many landlords, the main issue is the amount of time it takes. Many people are unaware of how encompassing the role of the landlord can be, so if you value your time, you are advised to pay for the external support provided by a letting agent or property management service provider.
You need to have insurance in place
Standard home insurance isn’t suitable for landlords, and it won’t provide coverage in a rental situation. Therefore, you need to ensure that you have sufficient insurance in place, and many landlords also take out cover for the loss of rent. A rent guarantee can cover you if the tenant fails to pay or the property lies empty for an extended period.
Some landlords take out coverage to ensure they can rehouse tenants if a problem arises and it is possible to buy insurance which provides cover if tenants damage the property. Also, with the introduction of the Homes (Fitness for Human Habitation) Act, there is an opportunity for tenants to sue landlords if the property is in poor condition.
Therefore, a lot of landlords take out insurance which covers legal fees if the need arises.
Safety checks are required
There is an increasing array of safety checks required in rental property, and these often have to be carried out by qualified professionals. Therefore, landlords must meet the cost of hiring these professionals.
Also, landlords should allocate money for repair and maintenance work, helping to maintain the condition of the rental accommodation.
Cleaning is essential
While landlords should encourage the tenant to clean the property and maintain its condition, there may be times when a landlord decides to undertake a thorough clean. Also, if a tenant has left the property in poor condition, the landlord must improve the property’s condition before it is placed onto the market.
If a landlord has time and cleaning abilities, they can do this work themselves, which means they need to pay for cleaning materials and equipment. However, many landlords decide it is more cost effective to hire a cleaning company to take care of the property.
Once a tenant has vacated your property you will need to get it into the best possible state for your next tenant. If the property is in a particularly poor state, you may be able to use your tenant's deposit to cover some of the costs. But more often than not you should expect to pay for the cleaning and redecoration for yourself.
Other costs landlords need to consider include:
· The cost of drawing up a tenancy agreement
· Registering with a deposit protection scheme
· The cost of obtaining an EPC
· Utility bills
· Security measures in the property
· Dealing with tax
It is possible for landlords to generate income, but there are many costs involved with being a landlord. If you need guidance or advice in being a landlord, contact Holmes Estate Agents, and we will be more than happy to assist you.