How much does it cost to operate one private rental property per year? This is a question that new or would-be landlords may be asking themselves, and now high-street lender Nationwide has calculated precisely how much, on average, it costs to run a single privately rented home.
The figures put together by the building society are likely to prove contentious – not least because of regional variations and major differences in how much landlords shell out on management fees. Many landlords, for example, use the expert services of a letting agent, while others choose to manage their properties themselves. Some take a half and half approach.
Nonetheless, the research has attempted to put a headline figure on the cost of letting a property. In terms of annual costs, the bank calculated that this would include electrical safety checks (if applicable), tenancy renewal, management (including rent collection), completing related tax returns, insurance for buildings, paying for ground rent (if applicable), maintenance charges and an annual gas safety inspection – and that this would come to £879, although some 30% of landlords apparently spend over £1,000.
Meanwhile, annual maintenance costs – for things like wear and tear repairs, replacing broken items and redecoration – would be £601. Again, though, Nationwide said 16% of landlords would spend more than £1,000 on these expenses.
Lastly, finding new tenants – which would include advertising the property (online and otherwise), arranging viewings, running financial background or immigration status checks, paying fees to letting agents to find new tenants, preparing an inventory, and pre or post rental cleaning – would set landlords back £552. However, 18% once again spend more than £1,000 while a lucky 18% spend nothing (typically landlords with existing or long-term tenants already in place).
All told, then, the research suggests that landlords would need to pay £1,500 a year to let a property, increasing to more than £2,000 if a new tenant is required.
While this might sound a lot, it can be easily offset by strong and healthy rental income and decent rental yields. As they say, you have to speculate to accumulate – and for landlords who invest in the right areas and provide good-quality, well-maintained rental accommodation, good profits on their investment can be achieved.
The mean monthly profit from letting property, once typical costs have been taken away, is £610. Over a 12-month period, that’s equal to £7,320. Of course, rental incomes vary across the UK, but if you find yourself in a popular tenant hotspot with high demand and limited supply – as is the case in Edinburgh and the Lothians – you can charge higher rents and feel confident about filling your homes with relative ease or keeping existing renters for the long-term.
Much of the stress and strain of being a landlord can also be taken away by an experienced letting agent, who understands the local marketplace and can source good, reliable new tenants if required.
At Letting Solutions, we’re proud to be West Lothian’s first dedicated lettings agency and make it our mission to ensure all tenancies go off without a hitch and that our landlords get the absolute most from their rental properties – whether you have one rental home or one hundred.
We are there to make your life easier, helping you from the preparatory steps of a tenancy right through to check-out time. This includes everything from information on insurance and arranging furnishing and décor to rental assessments, accompanied viewings, tenant suitability checks (including references), negotiations on rental deals and internet and newspaper advertising.
During the tenancy we then manage the property as it if was our own, including selecting the right tenants in the first place, conducting inventories, advising on safety issues and other regulatory requirements, securing rental payments and carrying out repairs and maintenance. We also deal with tenant enquiries via our helpline and take proactive steps to minimise or swerve void periods.
Letting a property needn’t be stressful – and, although renting a property does come with associated costs, more often than not this is offset in the form of a steady stream of rental income and healthy rental yields over time. Trusting your property to a professional letting agency – who can manage tenancies on your behalf – will also save you time, money and effort.
New landlords shouldn’t be put off entering the market by how much letting a property might cost – they should look at the bigger picture, the strong returns on investment and the ability, over time, to build a larger, more profitable portfolio.
For more information about what we offer, please get in touch on 01506 425693.
What’s more, we provide free and instant online valuations to give you a good estimate of how much your property could be worth in the current marketplace.