Sometimes landlords underestimate the costs involved in letting out their properties. So what may be some of the unexpected costs of being a landlord?
1. Estate agency fees
Many estate agents change 8-10% per annum for finding a tenant, it doesn’t generally end at the agency finding you a tenant, you may be liable for paying for the finders fee year after year of the tenants tenancy. You may also be liable for paying a deposit registration fee.
2. Replacement of furniture and white goods
When an inventory is carried out upon the start of a tenancy, the inventory clerk makes a list of items that are in the property, any item that breaks, it is the landlords responsibility to replace it, this includes sofa, wardrobes, fridge freezer and similar items.
3. Service charges and major works
Flats and some freehold houses within gated developments are responsible for paying service charges. Some of the service charges include hot water and heating, which results in high service charges for the landlords. At times, you may be hit with high service charges due to major works as roof replacement, window changes and communal area updates. These will eat up your rental income from the property.
4. Unaccounted maintenance costs
Wear and tear can cause leaks in the roof, leaks in the bathroom and kitchen or even flooding in some areas. As a landlord you need to have funds available in case of unexpected such costs.
5. Mortgage interest relief
Section 24 is diminishing landlords’ rights to offset mortgage interest costs against tax gradually over the next 3 years.
6. Freeholder costs
A freeholder can charge you fees for renting out your property if subletting is not permitted by the freeholder, depending on the lease. You may also be liable for paying lease extension fees depending on how long your lease is.
7. Property Management
We speak with many landlords who are far away from their property, some simply have no time to manage a property, some had enough of managing their own property for many years and decided it is time to hand it over to a property manager. The cost of a property manager is between 5-8% of the annual rent, simply an amount many of the landlords have not accounted for.
8. Section 21 notices
You may decide to have the 21 notice served by a solicitor and if it goes to court you would be liable for £355 court fees that was unaccounted for.
Please contact Pelin Martin to book a 30 minute free property consultation on