8 Important costs a Cheadle Landlord needs to budget for

Despite it undoubtedly being harder these days to become a residential buy to let landlord in Cheadle, with the increasing amount of red tape and compliance, there are still plenty willing to give it a go! 

However, many still go into it with their eyes wide shut! believing that being a landlord is as simple as buying a property, finding a tenant, and collecting the rent.  If only that were the case!

But the truth is, letting a property comes with a number of responsibilities and obligations and if you do not keep on top of these – there have been over 300 pieces of new legislation governing all aspects of the rental market over the last five or so years, many subtle changes that a lot of landlords are not even aware of – could cost them a significant amount of money or they could end up finding themselves in court. 

So, Maurice Kilbride Residential Sales and Lettings Limited have put together a list of 8 things that a landlord should be prepared for and have a contingency fund in place to cover any unexpected eventuality. 

Mortgage repayments

If you have a buy to let mortgage on your rental property, repayments will be the most significant monthly outgoing for most landlords. We are sure most landlords who took out a mortgage will have a fixed rate to keep repayments fixed and consistent and we would certainly advocate looking at this if your current deal is about to expire, especially in the current economic climate and with the Bank of England monetary committee decision to increase interest rates. We would also recommend landlords always have at least 3-6 months mortgage repayments set aside in case a tenant runs into financial difficulties and stops paying the rent for a period. 

Finding a tenant and credit checks

Some landlords elect to do everything themselves. Obviously, you would expect us to extol the virtues of using a good experienced letting agent and fortunately most landlords do elect to have their properties professionally let and managed. Yes, there is a cost implication, but usually good, experienced agents will be able to source a tenant and spot a wrong un! from the widest pool and carry out in depth checks to ensure their suitability both as a person and financially. 

Property management

Having a good letting and management agent look after the day-to-day affairs of the property may cost you anything from 8 to 15% of the monthly rent, depending where you are in the country. However, this might give you more time and peace of mind, as all the paperwork can be handled by the agent, inspections, repairs, disputes but most importantly always keep you legally compliant. 

Covering void periods

Even the most optimistic and diligent landlord should be prepared for a property to be empty for a short period between tenancies. It’s also possible that a tenant could fall behind on the rent. As mentioned earlier, having a contingency fund of up to 6 months rent is always advisable. 

Maintenance and repairs

All properties require general maintenance from time to time and in our experience, prevention is usually cheaper than cure. Landlords have a legal obligation to keep their properties safe and secure – such as gas safety inspections, Electrical Installation Condition Reports, smoke, and carbon monoxide alarms. These things all cost money, plus other repairs which can spring up routinely. We would recommend having at least a 10% of the annual rent “slush fund” for repairs. 

Service charges and other fees

If you own a flat, you will be liable for service charges – not the tenant. As the leaseholder, you will also be responsible for repair costs to communal areas and also potentially significant costs to remove any cladding which could be a fire hazard.

Insurance costs 

Landlord insurance is a condition of most buy-to-let mortgages. You can opt for a general policy (this should cover property liability, buildings insurance, contents, and loss of rent) or one that is more far-reaching (but will have higher premiums). We have several landlord insurance products available through our partner insurance company that we would be happy to discuss with you. 

Taxation

The rules around what you can and can’t claim as a landlord have tightened in recent years and are changing again. To ensure you only pay what you should, and claim that to which you’re entitled, do your research, keep all relevant receipts and paperwork, and engage the services of a good tax accountant

Whether you are considering venturing into the buy to let market for the first time or are a portfolio landlord, we are always here to help. We offer a range of services and fee packages to suit all budgets and requirements and would be happy to review your existing portfolio and provide a totally free and without obligation compliance check for you, whether you manage your own properties or use another letting agent.

Please call Patrick or Maurice on 0161 428 3663, e-mail lettings@mkiea.co.uk or why not pop into our office in the centre of Cheadle village for an informal chat and a cup of coffee.