Landlord Costs and Expenses Checklist
In the UK, landlord costs can vary from city to city. Before investing in buy to property, you should put together a list of the costs and expenses involved with being a landlord.
There are many different things that you will need to budget to run a profitable business. Things like, mortgage payments, insurance premiums, maintenance costs and taxes like HMRC rental property expenses.
Most of your landlord expenses are relatively easy to plan out. Below are our landlord costs and expenses checklist every landlord should consider.
9 Landlord Costs you Need to Budget For:
Maintenance and repairs
Letting agency fees
Health & Safety
Credit checks & referencing
You Must Pay Your Mortgage
Unless you own your property outright, you are going to have a mortgage to pay. Not paying your mortgage will result in you losing ownership of your property.
Mortgage payments are usually a landlord’s biggest monthly expense and rates can change over time. If like most people you have a fixed-term mortgage, you know what your monthly payments will be and they don’t ever change.
Tracker mortgages, however, can fluctuate periodically with any changes to interest rates made by the Bank of England.
If you have a tracker mortgage you will need to make the proper calculations to budget for any fluctuations.
Don’t Forget Your Landlord Insurance
Landlord insurance is essential. Much like mortgage repayments, landlord insurance premiums can go up and down.
And just like your mortgage, you don’t want to miss too many payments. Missing payments can result in your policy being cancelled and your property will be left uninsured.
If the worst-case scenario occurred you could lose your property and end up facing financial ruin. This is why landlords put mortgage and insurance payments at the very top of the list.
Time to Redecorate
It’s recommended that full redecorations should be carried out every three years. But you will always find work that needs doing in-between lets.
You will usually need to clean and decorate the property after each tenancy agreement is terminated.
This means you will need to put aside a budget specifically for buying paint. Unless you plan on doing it yourself, you should put some money aside to cover the cost of hiring workers.
As a minimum, you should budget for the cost of having the property painted and professionally cleaned after each tenant’s term, usually 6-12 months.
The True Cost of Maintenance and Repairs
If you have read up on your landlord and tenant responsibilities, you know there are maintenance and repairs you will be responsible for. It’s important to budget for these so you don’t get caught off guard.
Some of these will need to be performed more regularly than others. Roofs, white goods and boiler systems will only need to be replaced every 10-15 years, these are easy to budget for. Emergency repairs and general maintenance is much harder to budget for because it can vary with every property.
A good general rule of thumb is to put aside 1% of the property’s total value for repairs each year. For example, if your property is worth £150k your annual repairs budget would be £1500.
Letting Agent Fees
If you hire the services of a letting agent the costs will need to be factored into your expenses budget. Most agents charge around 10 – 20% of the monthly rental income, which isn’t bad if they are good property managers. PRS Lettings offers a fully managed service for 10% and zero VAT!
Landlords with 5+ properties usually seek the services of a property manager. PRS Lettings can offer you a comprehensive service.
But not all landlords use letting agents manage their properties. A small number of landlords choose to manage their properties and just pay a one-off fee to agents for finding tenants.
Discuss all the potential fees and expenses in detail with your letting agent so you can effectively budget for them.
The Price on Health and Safety
Gas safety certificates cost around £50 per gas appliance. You will need to update gas safety certificates every 12 months to stay in compliance with the law. It’s also a legal requirement to have an Energy Performance Certificate (EPC) for rental properties.
It can cost anywhere from £60 to £120 to get your property on the EPC register. Your registration will then be valid for the next ten years. It’s a small cost but it all adds up and it must be budgeted for. Costs for an Electrical Installation Condition Report will start from £100.
How to Budget For Loss of Rent
There are two ways a landlord can experience loss of rent, void periods and tenants falling behind. Void periods are inevitable and simply cannot be avoided, but you can budget for them. The average void period for a rental property is 3 weeks per year.
Experienced landlords recommend you should set aside 1 months rent to cover your expenses when your properties are vacant.
Tenants falling behind on the rent can be far more costly than void periods and difficult to budget for. Just make sure you take quick action the minute a tenant is late
Paying Your Taxes
You may have to pay tax on any profits you make from your rental income. To work out how much tax you must pay you first need to calculate your allowable expenses.
Allowable expenses include maintenance and repair costs, council tax, utility bills, insurance, service costs such as cleaners and gardeners, and letting agent fees.
Once you know your allowable expenses, you simply deduct them from your rental income and what’s left is your taxable profits.
For more information on paying tax on rental income click this link.
Bringing in The Tenants
To attract tenants into your properties, you will need to set aside a marketing budget. Rightmove is the biggest online property site in the UK with over 120 million visits per month. After that, you have Zoopla with over 35 million visits each month. PRS Lettings includes marketing across online portals for free when you sign up with us!
Obviously, with this type of traffic, it’s a no-brainer, you absolutely must advertise your property here. But property portals only allow Lettings agents to advertise and not private landlords so you will have to talk to a lettings agent.
Credit Checks and Tenant Referencing
Once you have found a potential tenant, it’s a good idea to pay for credit checks and professional tenant referencing.
You will be able to see if they have ever faced bankruptcy or if they have had any County Court Judgements (CJJ’s). Spending £10 on a credit check could potentially save you a lot of money in the long run so it’s worth budgeting for.
Costs and Expenses Summary
Planning for unexpected landlord costs is all part of successful budgeting. The key is to expect the unexpected and keep a detailed account of all your landlord outgoings and expenses.
You can get mobile landlord apps specifically designed for landlords to help you keep track of your expenses.
To make things easier on yourself, a good letting agent will give you all the advice and guidance you need to track your landlord costs while keeping your outgoings to a minimum.
Finding the Right Student Accommodation isn’t Always Easy
Finding student accommodation can be a daunting task. For most students, it will be their first time living away from home. It’s normal to feel nervous or excited and you may be sad about moving away from your family.
Settling into a new city can be hard at first, you will have to learn your way around and make new friends. Arranging student accommodation before you arrive will make things much easier for you.
When it comes to finding the right place to stay there are a few different options out there for you to choose from. But how do you know which option will be best for you?
The research discovered by Which shows us that the majority of students live in student accommodation provided by the universities (41%), a lot rent privately (25%) or stay with family (23%). So should you rent privately or go with the university? House share or apartment?
What to Expect When Renting Private Accommodation
The first thing I will say to you is, if you are thinking about renting privately you should start your house search well in advance. DO NOT leave it to the last minute, once the university has started it’s going to be more difficult to find somewhere.
The best places get snapped up fast so it’s better to secure your spot nice and early.
The good thing about renting privately is you get to choose exactly where you live and with. Most students who rent privately will live in shared accommodation like a house share.
This is where you rent a room in a house and share the kitchen, bathroom and living room with other people. House shares usually have anywhere between 3 and 6 occupants.
You will also get to experience what it’s like to be independent and responsible for paying your rent and bills. And you will have a little more freedom and fewer rules than living in accommodation provided by the university.
Now let’s take a look at the house shares vs apartments vs halls of residence.
Choosing the Right House Share and Roommates
The last thing you want is to get stuck in a nightmare house shared with a load of scruffy housemates.
Imagine walking into the bathroom in the morning, stinky toilet, toenail clippings in the sink, puddles of water on the floor, the kitchen a total grease pit, sink overflowing with dirty dishes, smelly bins, housemates keeping you up at night. Doesn’t sound like much fun right?
This is why it’s best to move in with people you already know but, it isn’t always possible. You may have to move in with strangers, so how do you avoid nightmare house shares?
The truth is most house shares are not going to be a nightmare at all. You are most likely to be moving in with other students just like yourself and it’s a good way to make new friends.
But, it’s still a good idea to try to find out as much as you can about the people you will be sharing a house with before deciding to move in.
If you can visit the house beforehand, inspect the kitchen and bathroom for cleanliness. If the kitchen and bathroom are total disasters it’s a good sign that it’s not going to be the cleanest house share in the world.
You can also try to look up the occupants on social media, you can get a general idea about who someone is by checking out their Facebook profiles.
Student house shares should be furnished, the bedroom should contain a bed, a desk for study, and a wardrobe for clothes. There should be a sufficient number of bathrooms for the number of occupants in the house.
The kitchen should be equipped with a big enough fridge, a cooker, microwave and a washing machine. There should also be a living area with sofas plus table and chairs where members of the house can eat and socialise.
My top tip when renting house shares is to always check out the boiler system. Some old boilers are not able to supply enough hot water for large households and the water will run cold if somebody flushes a toilet for example.
You also want to make sure the property is secure with good locks on doors and windows plus locks on individual bedrooms. And another thing to take into consideration is do you smoke? If smoke bothers you then you should look for a non-smoking house share.
Renting your Apartments
Now, this is life! Your very own apartment just for you, fantastic if you can afford it. You could even take a look at moving in with a friend, though it will cost you more than a house share.
But living with a lot of other people can test your patience at times if you feel you need peace to study then an apartment is a way to go.
You will have a lot more privacy and your possessions will be more secure. Life in an apartment is much easier than a house share, nobody is there to get annoyed at you if you leave dirty dishes lying around.
Nobody will ever ask you to turn your music down (unless you upset the neighbours of course) and you never have to wait for the bathroom.
The kitchen and bathroom are always exactly as you left it and you don’t have to put up with anybody’s noise like music or phone calls. Renting an apartment is the best way to go but like I said, only if you can afford it.
If you do decide to rent an apartment make sure it’s furnished and in a good location. You want to be close to public transport, banks, shops and supermarkets.
Inspect the property before renting, make sure it is secure and well maintained. Doors, locks and windows should be in good working order, as should any furniture and appliances.
Take a look at the building from the outside, this will give you a good idea of how well the property is being maintained. If you see any damage to the roof or windows then this is a sign that the landlord may not be 100% when it comes to maintenance.
Applying for Halls of Residence
University halls of residence are usually reserved for first-year students. It can be a good idea if you’re moving to a new city and you don’t like the idea of sharing a house with strangers.
They may be slightly more expensive than a house share but it’s a great way to meet lots of new people.
You will be close by to the university so you will save money on transport. And living on campus in a student community is guaranteed to be one of the most fun experiences of your life.
After the first year is over you may decide to move into a house share with the new friends you made. This way you won’t have to share a house with total strangers.
Whether you rent a house share or an apartment you are going to have to pay bills. Sometimes the bills are included in the cost of the rent but if not then you will have to pay for electricity, gas, water but not council tax.
A property wholly occupied by full-time students is exempt from paying council tax. If you do get a bill for council tax you can apply for an exemption.
Paying bills if you live alone or with one other person in an apartment is easy, but when you are in a large house share it can get tricky.
How do you divide the bills up equally so that everyone in the house pays the same amount of money? You will need to devise a system and it’s best to get the money discussion out the way early on so there are no disagreements.
There are a few methods that people like to use, nominating one person to pay the bills and then collect the money from the rest of the household is one popular method.
You can also go for joint bank accounts although there may be trust issues if you don’t know your housemates well. One bill each is another method but you will need to make sure they are rotated evenly so everybody pays the same at the end of the year.
TV License and Internet
As well as paying the utility bills and council tax you will most likely need the internet. And if you own a TV you must also pay the TV license. Even if you live in a house share and have a TV in your room then you are responsible to pay the TV license.
You can pay for your TV license online and choose to pay monthly, quarterly or yearly totalling £150.50 per year.
When it comes to the internet and house shares you will need to take into consideration how many occupants are living in the house. You also need to think about how many people will be online and what people are using the internet? Download speeds will need to be faster if there are a lot of people watching Netflix and downloading music at the same time.
There is no shortage of internet providers but some of the most popular in the UK are… BT Broadband, Virgin Media, Sky Broadband and Plusnet. There are also sites online that will find the best internet deals in your area, you just simply enter the postcode.
Landlords and Legislation
As well as potential housemates, it’s just as important to find out what you can about the landlord. Try asking the occupants if the landlord is prompt when responding to requests and carrying out general repairs and maintenance. The property should be properly maintained and you shouldn’t have any difficulty contacting the landlord at any time.
Tenants have rights and obligations as do landlords, and it’s important for you to know what they are. Sometimes tenants can end up having disputes either with the landlord or other tenants in a house share. If this ever happens you need to know your legal rights and obligations so you can deal with the situation properly.
Contract and Deposits
Most landlords will want you to sign a 12-month contract and usually a guarantor is required to guarantee the rent. If you don’t have a guarantor then do not worry too much, it just means your search will be a little harder but not impossible.
You will also require a deposit, this is usually the equivalent of one month’s rent. Your deposit will be returned to you at the end of the contract term providing there is no damages or repairs to pay for.
It’s a good idea to request an inventory containing a list along with photographs of the contents in the property. If this isn’t provided take lots of photographs yourself and make a list of contents. This can be used as evidence if there is any dispute about damages in the future.
Finding Student Accommodation Online
The best place to start your search is online. If you are looking for student accommodation in Leicester then our website is the perfect solution.
We are one of the largest independent letting agents and manage a variety of student properties in Leicester.
If you are aiming to live in the university halls of residence then you need to apply early. There are limited spaces and there will be a lot of applicants so the sooner you secure space the better.
To apply for university halls of residence you will need to contact the university you are going to. There are also private halls of residence which will cost you a little more but usually have better facilities than the university.