So you’ve purchased a buy-to-let property and you’re ready to rent it out. What’s it going to cost you? Read on to find out…
As per our previous blog, figures below are based on a three-bed house in Bedfordshire, rented out at £1,500pcm, which works out at £700 profit per month after mortgage repayments.
Agency fees
Looking after a buy-to-let on your own isn’t easy, and we don’t advise it. If anything goes awry (and there’s a lot to stay on top of!), you risk fines that far outweigh agency fees. A lettings agent can take care of everything, from marketing to legal work and paperwork. Our service plans are tiered depending on how much help you need, with pricing from as low as just one month’s rent – £1,500 in this case.
Certifications & Safety
Every rental must have:
• An EPC (Energy Performance Certificate) – c.£80, valid for 10 years.
• An EICR (Electrical Installation Condition Report) – c.£200 for a three-bed house, carried out every five years.
• Smoke alarms – from £7, one on every storey.
Homes with a gas supply must have:
• A Gas Safety Certificate – c.£80, annual checks required.
Additionally, carbon monoxide alarms (c.£15 each) are needed in properties with a gas supply and/or any fuel-burning fires.
Insurances
Buildings insurance is about £200 a year for a three-bed house. You won’t need contents cover unless the property comes furnished. Landlord-specific insurance rises to around £400 per year, to include things like legal expenses and loss of rent.
Accountant
An accountant isn’t always necessary, but they will make landlord life much easier. The price for a tax return is likely to be £200.
Maintenance
Prepare for any unexpected maintenance by putting some funds aside. According to Habito, UK landlords spend around £765 a year on maintenance. At Orchards, our in-house maintenance team could actually save you money through efficiency and expertise.
Total out: £3,254
Total in: £8,400pa, plus equity, plus capital appreciation, which is typically between 2.5% and 5% per annum in our area.
Once again, property investment proves a solid prospect for long-term profit.
In our next instalment, we break down what it could cost if you rent to the wrong tenant. Watch this space…
