- Know the top 5 hidden costs of being a landlord, and dive deep into the detailed breakdown of these costs.
- Associate with professionals who can help you manage all your costs and ensure you can earn decent profits from your property investments or renting.
Did you know one in eight landlords underestimate the real cost of using buy-to-let as a source of income by over £8,000?
Do you want to consider all the hidden costs of being a landlord to avoid profit shrinkage?
From income taxes to insurance, multiple factors can hinder your profits.
But to avoid legal complications, you must know the top five hidden costs of being a landlord in the UK.
So, without further ado, let’s get started.
5 Hidden Costs for Landlords in the UK
There are multiple minor and major costs attached to investing in a property or operating a rental property. We have filtered the five hidden costs that you must know.
1. Landlord income tax
As a landlord renting out your properties, your profit will be subject to taxes. You can include the property management, and maintenance costs will come under expenses.
You should file away all receipts for any work for your property to ensure you remain on top of income tax. Organising your finances can be difficult, so you can associate with professionals or learn accounting skills to avoid complications while filing your taxes.
Although it can cost you extra, you can remain on top of your finances and avoid any profit shrinkage due to hidden costs.
2. Legal fees
As the most neglected cost consideration among landlords, you must know your legal costs. Although legal fees are less expensive than other costs for landlords renting out their property, they can add up and affect your profits.
The legal fees include:
- Utilities such as water and ground rent
- Security measures
- Setting up a limited company
- Tenancy agreements
- Deposit Protection Scheme registration
- Obtaining an energy certificate
Don’t try to avoid these fees. Instead, you can seek advice to figure it out to save money. You can also hire professionals who can minimise your hassles and handle all the complications related to different legal fees.
3. Safety checks and maintenance
Another hidden cost you may overlook is keeping your property in good working order. Don’t be surprised by the cost of property maintenance.
Although there are limited maintenance jobs, which are the landlord’s responsibility compared to the tenants’, you have to ensure the overall maintenance and safety of the building.
It helps reduce the problems you and your tenants might encounter. Also, you are legally bound to carry out yearly safety checks on gas and electrical appliances, which cost between £40 and £100.
Health, safety, and maintenance of your property won’t add a huge amount to your bill, but they can help you avoid unexpected costs or fines.
Note: You must also provide your tenants with fire extinguishers and smoke detectors, which can be expensive.
4. Landlord insurance
You need a particular type of insurance because your standard home insurance policy will not cover the same risks as a landlord insurance policy. You should read the terms and conditions of the insurance you are applying for.
When you know what you are insured for, you can avoid any future hiccups resulting from being unaware of the T&C.
You require basic building coverage in your policy, but based on your requirements and unique situation, you can alter your insurance policy.
If you rent out your fully furnished property, you must get the correct contents insurance to cover yourself. Here are a few recommendations for covering yourself:
- Cover for damage caused by tenants
- Loss of rent
- Any legal fees in case you need to evict a tenant or if they take you to court
- Providing alternative accommodation for your tenants if your property becomes uninhabitable
5. Letting agent fees
You can choose two types of services when we discuss letting agency fees. You can choose from an Online or High Street Letting Agency.
There are two options you may come across:
- The full management service: The full management service finds your tenants and manages the property for you.
- The basic service includes tenant finding and handling all the interviewing, advertising, and credit checks.
These are the five hidden costs that you must be aware of being a landlord.
But you avoid all the hassles related to the costs with professional property management services from Pluxa Apartments.
Choose Pluxa Apartments for Your Property Management
At Pluxa Apartments, we offer property management services to help you escape the hassles of managing your apartment.
We can help you manage your apartment and address all the hidden costs, marketing, guest screening, and maintenance. Our professional team has experience working with landlords and addressing their problems related to hidden renting costs.
So what’s making you wait?
Contact our team to streamline your budgeting, financing, and other aspects of renting our property.
Are there any landlord fees in the UK?
Yes, there are multiple landlord fees that you must be aware of in the UK. Here are a few of the main services and associated fees:
- Tenant-Finding Services: This includes advertising the property, showing it to potential tenants, conducting reference checks, arranging contracts, collecting deposits, and the first month’s rent. Fees for this service can range from a one-off fee of £700 to £1500 or a monthly fee of 4% to 13% of the rent.
- Rent Collection: If the letting agent also collects rent, expect to pay between 5% and 10% of the rent collected.
- Full Management Services: For comprehensive rental property management, fees can be around 20% of the rent.