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The Forgotten Costs of Being a Landlord

Monday, 14th November 2011

Categories: Lettings Property Management

Author: Peter Barry

Letting out a property can initially seem like a quick and easy way to capitalise on your property and to make a bit of extra cash without having to work too hard for it. When you work out the monthly rental your property could earn, compared to your mortgage payments, you might be pleasantly surprised by the sums. However, before you go ahead and put your property on the rental market, there are a number of other costs and considerations that need to be taken into account. Here are some of the costs that potential landlords tend to overlook.

Management fees

You will need to have a tenancy agreement. It is possible to draw up your own contract, based on a standard form that you can buy or download but many people prefer to rent their property through an established agent. You can generally choose between a standard tenant-finding agreement, or a full management service. The fees and services will vary between individual agencies.

Void periods

You need to take into account the fact that your property probably won’t be let out for 52 weeks of the year. You might strike it lucky and find a tenant who stays for a number of years but this can’t be relied upon when you do the maths. It is unlikely that a new tenant will move in on the same day a previous tenant moves out so it’s important to ensure void periods can be covered. Here at Peter Barry, void periods are kept to a minimum where possible. Due to our standard 2 month notice clause used within in our tenancy agreements, we usually re-market a property as soon as notice is given by the tenant. This allows us enough time to find a suitable replacement at a time scale that suits the landlord. We would always advise to leave at least a few days between tenancies to make sure that the property is clean and tidy for the ingoing tenant and that the necessary compliance checks are carried out.

Safety checks

There are strict guidelines when it comes to things like gas and fire safety and you’ll need regular checks and certificates for your property. For example, you need to have an annual gas safety check and any appliances that are included in the property will need to be tested.

Maintenance

With the best will in the world, even the tidiest tenants cannot keep a property fully maintained and you will have to set aside money to update, upgrade and maintain the house. Carpets will need to be replaced, rooms will need repainting and general maintenance could be required at any time. The costs all stack up. And remember, if you include appliances in the property, it will be your responsibility to repair or replace them if they break due to wear and tear use. You should also factor in cleaning costs between tenancies. You might have included a clause in the contract that requires tenants to pay for a professional clean when they move out: if not, the costs will fall on you.

Schedule of Condition Inventory

Due to the change in law relating to how a tenants deposit is protected, we would always advise our landlords to have a new inventory prepared before any new tenant moves in. A landlord cannot deduct any funds for damages or breakages without proof of how the property was before occupancy and after vacation. Today, this is a real must for all landlords.



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