While landlords continue to benefit from high levels of private demand in light of sky-high property prices, there’s no doubt that those who operate individually can find it harder to achieve a sustainable profit than organizations.
One of the main reasons for this is that 43% of landlords own just one rental property, with this representing some 20% of tenancies.
Of course, owning just a single property can be challenging due to many of the different costs and factors involved. But what are the key considerations that you should factor into your budget?
1. The Mandatory Requirements
Let’s start with the basics; as your first step should be to budget for the mandatory requirements that you’ll have to address as a landlord.
For example, you’ll need to fund a number of checks and inspections each year, in order to ensure that the property is safe and liveable.
For example, you’ll have to ensure that gas and electrical safety checks are carried out by qualified tradespeople, while you also have to inspect any appliances that you left installed on the property.
EPC checks are also required to evaluate a property’s energy efficiency and performance, based on factors such as insulation and how much it costs to heat the interior. Similarly, you’ll need qualified electricians to check all smoke and carbon monoxide alarms installed within the property, as these must remain functional at all times.
2. Circumstantial Costs
As a landlord, you’ll also have to consider various circumstantial costs, each of which helps you to manage your property and provide a financial safeguard in the event of your property being damaged or vandalized.
One of the most apparent circumstantial costs is lettings agency fees, which you’ll need to pay when listing your property for rent. If you also want an agency to manage your property and tenancy agreements, you’ll also have to pay a premium for this service.
While it may be considered an additional cost, we’d argue that landlord insurance is an incredibly important expense.
In fact, this should be seen as an investment, as it protects your property and provides coverage in the event of structural damage being incurred.
3. Are There Any Other Potential Costs
Before we go, it’s important to consider any other costs that may be required when owning property as a private landlord.
For example, if you don’t employ the services of a property maintenance firm, you’ll be physically and financially liable for all maintenance and repairs carried out at the properties that you own.
You may also have to cover the cost of utilities (depending on the nature of your tenants and individual contracts), so this may need to be incorporated into your budget.
In between tenancy agreements, you may have to redecorate your properties and have them professionally cleaned. This will depend in part of the state property is in at the end of the previous tenancy, but some level of cleaning and refurbishment may be required as a matter of course.
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