Being a landlord is expensive, and it is vital landlords are aware of the costs associated with being a landlord. Buying to let requires a considerable outlay, with landlords needing a sizable deposit and then committing to monthly mortgage payments. However, there are also many ongoing costs of being a landlord, and you must allocate money in your budget for these costs.

Be aware that buy to let mortgages are often more expensive than standard mortgages, carrying a higher rate of interest. You will likely need to show expectations of rental income which will cover your monthly rental payments, but you can’t always guarantee you will receive rental income each month.

Letting agent fees

If you use a letting agent, you need to pay them. There are commonly two types of services from letting agents:

• The basic service which finds you a tenant and vets them
• The more extensive service, the full management service

It stands to reason the full management service is more expensive, but rather than focusing on cost, consider the value for money from the services. If you don’t have much time or you have little confidence in being a landlord, rely on a letting agent to provide a full management service.
If you think you have time to manage the property, and you need assistance in finding and vetting tenants, opt for the basic package. There is a wide range of agents offering services, so review your options, and don’t think they are all the same. Each package may be different, so determine what you need, and then choose an agent with a good reputation and who provides you with sufficient services.

It is possible to be a landlord without using a letting agent. This move will save you money, but it will significantly increase your workload and the pressure on you. Many landlords believe it is cost-effective to use a letting agent for at least some of their landlord roles.

Landlord insurance

While there is no legal requirement for landlords to have landlord insurance, many buy to let mortgage providers won’t offer you a mortgage without one. Therefore, it is often a mandatory requirement. However, landlord insurance is often useful, and if you have to make a claim, you’ll be relieved you have insurance in place.

Standard home insurance isn’t sufficient for landlords, so you need to get suitable cover. Building cover is the necessary level of protection you need, but if you provide furniture for the property, you should consider contents insurance.

There is a wide range of insurance lenders and insurance policies, so review your needs and budget. You may save money by bundling insurance packages together, but it helps to speak with an expert to determine your needs.

Safety Checks and Maintenance

You must maintain the condition of your property, and that you carry out safety checks. Landlords are required to undertake annual gas tests if applicable, and this is a service you need to pay for.

Landlords are advised to allocate funds for these services, and routine maintenance work. If possible, you should place money aside to cover unexpected repair and maintenance work. Ideally, nothing will happen to your home, but accidents and unforeseen events can occur. Landlord insurance can minimise the impact of some problems, but it is helpful to be as flexible with money.

Legal fees and administrative charges

As you’d expect, there is a lot of legal work involved with being a landlord, and you’ll likely call on legal professionals to ensure you operate in the right manner. Some of the legal requirements you need to consider include tenancy agreements, registering with a Deposit Protection Scheme, obtaining an Energy Performance Certificate (EPC), potentially setting up as a limited company and ensuring you submit your income tax records correctly.

If you need assistance in determining and managing the costs of being a landlord, please get in touch. At contact Nationwide Accommodation Services Ltd, we aim to offer a comprehensive range of services and guidance, that help you deliver the best standard of service.