Rental Property Costs 1st Jun 2017
Recent research by mortgage lender Kent Reliance reveals some of the costs UK landlords face in the upkeep of their rental property.
Landlords currently contribute £15.9bn per year to the British economy through pre-tax spending on running their portfolios, supporting thousands of jobs. This has more than doubled from an estimated £7.1bn in 2007, owing to the rapid growth of the private rented sector and increasing costs per property.
The largest outlay is property upkeep, maintenance and servicing. Landlords spend £2.0bn in service charges and ground rent, £963m on insurance, £904m on utilities, and a further £1.1bn on other associated costs of letting a property.
Other fees include letting agents’ fees - £4.7bn per year, legal and accountancy fees - £644m and administration costs - £218m. Kent Reliance found that landlords lost £652 in voids per property per year. However, a survey by Endsleigh Insurance found that using a letting agent can save a landlord approximately £1910 per year, when taking rental income and voids into account. Most of the savings were made through agents minimising void periods, compared to landlords who deal with the rental of their property themselves. The majority of those surveyed stated that costs were reduced as the agent found tenants quickly, and were able to help with legal and financial matters resulting in savings there, plus letting agents are well placed to maximise rents.
36% of landlords surveyed are planning on reducing spending, while 1 in 5 are planning to increase rents to cover costs. 17% plan to reduce upkeep and maintenance costs, which is of concern as industry standards are being continually raised, with large penalties and even criminal records for landlords not complying with regulations. 10% plan to reduce spending on letting agent fees and mortgage costs. However stepping back and looking at the bigger picture shows, as stated above, that using a letting agent actually gives landlords a saving of almost £2000 per year.
Furthermore, when it comes to costs savings, what price can you pay for peace of mind? Endsleigh found that 41% of landlords stated the main benefit of using a letting agent is peace of mind. In today’s climate of increasing legislation within the Private Rented Sector, unless you know what you are doing, consider using a letting agent. A good agent will be able to do more than just rent out your property for you, they will give you advice as to how to achieve the best rents, how to increase the capital value of your rental property, how to add to your portfolio, and how best to handle your growing portfolio in today’s market.
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