Being a landlord is like operating any other business. There will be costs and some of them will be unpredictable. This post will discuss those costs which a landlord must pay and some of the unpredictable ones too.
You will need an Energy Performance Certificate (EPC) if you are going to rent your property and this must be in place before any viewings are undertaken. The EPC will last for ten years and then it has to be renewed. If you make any significant upgrades to the energy efficiency of your property then you can renew your EPC at any time to show this in the report. The approximate cost of an EPC is £55.
Gas Safety Check
Another legal requirement is a gas safety check and the award of a gas safety certificate. This has to be done every year and includes the checking of all gas fittings and appliances by an engineer who is registered Gas Safe. The cost of the check and the certificate will be around £80.
Smoke And Carbon Monoxide Alarms
A landlord must install smoke and carbon monoxide alarms in the property. This is not an expensive thing to do and makes a lot of sense. You will need to install one smoke alarm on each floor of your property and a single carbon monoxide alarm and this can be done for around £30.
Then there is the tax on your income. If you make a profit then you will have to pay tax on this according to your tax bracket.
In some areas you are required to obtain a landlord license. This is a tax operated by some councils and on average costs £500 for every 5 years. You need to find out whether your local council requires this or not as fines will have to be paid if you need one and don’t have one.
You are not legally required to take out landlord insurance but it can be a really good idea. If you have a mortgage on your property then the lender will insist on this. Policies vary and there are a number of extras that you can take advantage of. There is usually the option for “legal coverage” which would cover your legal costs if you had to force an eviction. Expect to pay upwards of £150 a year for this insurance.
Most landlords will have a mortgage secured on their property. There are interest payments to be made each month and needs to be considered as business costs. The cost of this will vary from lender to lender and is also dependent on the amount borrowed.
Unless you are going to rent your property to friends and family you will need to spend money acquiring tenants. There are several ways to do this so the costs will vary depending on the methods used. You could take out a private ad in the local paper or use a letting agent. An online letting agent is likely to charge around £50. If you go to a high street letting agent they will want a chunk of your annual rental income and this is normally around 8%.
Next week will take a look at some of the other costs that a landlord can be subject to so be sure to check in next week.