The truth is, letting a property comes with an array of financial and legal responsibilities. If you’re not on top of these obligations, you could lose money or wind up in court (or both). Here’s a list of costs that are part and parcel of being a landlord in Oxfordshire:
Mortgage repayments For most landlords, mortgage repayments are the most significant monthly outgoing.
Insurance costs Landlord insurance is essential and a condition of most buy-to-let mortgages. In addition, legal cover and rent guarantee insurance are options that you should consider.
Licence Costs Certain properties depending on their size, number of tenants and location may by subject to additional licencing schemes. Make sure you check the requirements of your local council before agreeing to a tenancy.
Maintenance and repairs All properties will require maintenance. Your most important requirement is to ensure that the property is safe (that means keeping up to date with things like, Energy Performance Certificates, landlord’s gas inspections and electricity safety checks) and keeping the property in good condition. Taps leak and appliances break down so set aside funds to cover this and any repairs that may be needed (property experts suggest between 5% and 10% of annual rent).
Inventory Costs We would always recommend that Landlords employ a professional inventory clerk to complete a comprehensive inventory and schedule of condition of a property immediately before a tenant moves in. Often the inventory clerk will be the person who hands over the keys to your tenants at the “check in” appointment. An inventory clerk should also check the property against the original inventory at the end of the tenancy “check out”. This protects both landlord and tenant and enables a fair process for the return of a tenant’s deposit and enables a landlord to claim in the event of damage being caused. The cost of an inventory and check in, check out appointments are paid by the landlord and will vary depending on the size of property and whether it is furnished or unfurnished.
Service charges and other fees If your property is in an apartment block, you may need to pay a service charge or ground rent. Leasehold property owners may also have to contribute to the cost of work carried out in the communal areas.
Covering vacant periods The most diligent landlords will be prepared for a property to be empty for a short period between tenancies to allow for additional cleaning and remedial works to be carried out before the next tenant arrives. We would normally allow 5 working days between tenancies. Rental properties may also require redecoration and new carpets more often than your own home. This is because of the higher turnover of occupants, the moving of furniture and general wear and tear so prepare for this in advance. It’s also possible that a tenant could fall behind on the rent. This can have a knock on effect with mortgage repayments and other property bills. As a rule of thumb we suggest you set aside at least six weeks’ rent to cover yourself.
Tax The rules around what you can and can’t claim as a landlord have changed and tightened in recent years. To ensure you pay what you should, and claim what you’re entitled, employ an accountant, do your research and keep all relevant receipts and paperwork.
Finding a tenant and credit checks Some landlords do these things themselves, but most good landlords leave it to the professionals and use an experienced letting agent. The DIY route may save you some money upfront – but it could cost you much more in the long run (think of the legal bills if it all goes wrong). A good letting agent will have years of experience at sourcing good tenants, checking references, providing the correct documents and spotting trouble in advance.
Property management and letting agent’s fees All letting agents are required to post their fees prominently in their offices and on their websites. Make you sure you understand what you are paying for and choose the service that is right for you. If required a letting agent will handle everything for you: the paperwork, the people management, the legal checks, the inspections, and the disputes. You can of course opt to do this for yourself. It will save you some money in the short term but may cost you more in terms of time and stress.
Here at Nicholas Jones Residential, we can save you time and take the stress out of managing a rental property.
Call us on 01865 292032 if you have any questions.