As a first time landlord you may soon come across numerous expenses you might not have thought about when entering the buy to let industry. Below are the 5 most common expenses that new landlords tend to overlook, just so you can see what might lie ahead.
1. Letting Agency Fees
If you have bought your buy to let property already then you’re probably in the process of finding suitable tenants. You can of course advertise and interview prospective tenants yourself but this is not only time consuming, it can be disastrous if you choose unwisely.
If you want to make sure you get tenants that have been checked and referenced then you should definitely consider using the services of a letting agent. They carry out all necessary checks on suitable tenants and they can go on to manage the everyday running of the property – so leaving you with more time to reinvest your buy to let profits. Of course letting agents do have fees and these can run to 10% of the rental amount in some cases.
2. Landlord Insurance and Legal Insurance
No buy to let landlord should skip the cost of buying landlord insurance with legal insurance included. Not only does landlord insurance cover everything that buildings and contents insurance covers, it also covers loss of rent due to an insurable accident and it includes property owner’s liability insurance. It is highly recommended that you also add legal insurance so that all legal fees are covered in the event you have to evict a troublesome tenant.
3. Decorating and White Goods
Buy to let properties are much easier to rent out if they are nicely decorated and they include the white goods in the kitchen. You can often charge a little bit more if white goods are included in the price of the rent as well. Thus, the goods pay for themselves over time but they are an expense to begin with.
4. Gas Certification and Maintenance Costs
As a buy to let landlord it is your legal responsibility to have all gas appliances within your property checked and certified safe every 12 months. This may only cost a few hundred pounds but should your boiler or gas over/hob be deemed unsafe you will then incur the cost of replacing the appliance.
5. On-going Maintenance
Painting and decorating is an on-going part of buy to let properties, and especially if you have a high turn-over of tenants. Every time a tenant moves out you will be required to touch up paintwork and maybe even decorate a few rooms in order to keep the property in good repair and attractive to tenants applying to take over the tenancy. You will also be required to do any exterior maintenance if it is deemed necessary, and you may even have to pay for a gardener during the summer months (depends on the details of the tenancy agreement).
There are of course other additional costs involved in the owning of buy to let property investment but the five mentioned above are the ones you really shouldn’t try to avoid just to save a pound or two.