Being a landlord can be a lucrative profession, and today rental properties are in high demand. However, new landlords often have no idea that though there is money to be made, there are also more costs than you would think involved in letting property.
The lettings process starts with the search for suitable tenants. Though these can be found through free online services like Gumtree or on social networks like Facebook, placing ads and responding to enquiries can be time consuming and complicated.
If you choose to go through an agency to save you this hassle, this will of course also incur extra costs. Even once you have found suitable tenants, you still have to pay for credit and reference checks to ensure they’re a good fit.
Insuring your property
As a landlord, you’ll need specialist insurance to cover your property to be able to let it out. You should consider too covering yourself for loss of rent, and for legal fees should you need to take action against your tenants.
Administrative and Legal Costs
At the beginning of the tenancy, you will have to draw up a Tenancy Agreement. You’ll also have to register with a deposit protection scheme to secure the tenants’ deposits. Its also a legal requirement for landlords to get a Gas Safety Certificate, and obtain an EPC. All these little tasks cost money- and add up.
Landlords are legally obliged to provide smoke and carbon monoxide detectors, and fire extinguishers.
While some basic jobs in the property may fall to the tenant, as a landlord it is your responsibility to ensure the building is in good working order all year long. You will need to complete odd jobs as well as cover the costs of any more major works. (For more information on the responsibilities of a landlord, read this post.)
End of tenancy cleaning
During the transition period between tenancies, the landlord must get their property into the best possible condition for the next tenants. You might be able to use some of the old tenant’s deposit to cover costs, but this will depend on the condition of the property.
As a landlord, you are not guaranteed to have your property always rented out. It may be empty at certain times while you are finding new tenants. It is therefore important for landlords to have enough money set aside to cover themselves during this time.
Landlords are taxed on the profits made from letting out their property. The costs of maintaining and managing the property though count as their expenses.
Ultimately then, the cost of being a landlord are much higher than many assume. But for many landlords, the greatest cost is time. Being a landlord puts huge demands on your time, especially at the beginning of a tenancy. This is why companies like Rentalist help make the lettings process so much quicker, simpler and cheaper. By acting on the landlord’s behalf to find tenants, carry out checks, draw up tenancy agreements and hand-over keys, Rentalist saves you time and money, and makes being a landlord that much easier.