Renting out your property is a lucrative business opportunity, but it also comes with a long list of expenses. Whether you’re an aspiring landlord or a current landlord who needs a refresher on the associated costs of renting out your property, here’s a comprehensive list of all the overhead and incidental costs you should be prepared to shoulder.
EPC (Energy Performance Certificate), £65 every 10 years
Every landlord is legally required to have a valid EPC before they can even show their property to prospective buyers. This certificate verifies how energy efficient a property is. Each EPC is valid for 10 years and can be renewed to reflect any new energy-efficient improvements.
Electrical Inspection Condition Report (EICR), £199 (plus £20 for each additional circuit) every 5 years
An EICR ensures that every kind of London property meets the national standards for electrical safety before it can accept tenants. A test and inspection will be conducted to find any faults or digressions from national wiring standards. The property must be inspected and tested again and a new report must be renewed by the landlord every 5 years.
Landlord Insurance, upwards of £150 every year (varies according to the size of the property)
Although landlord insurance isn’t mandatory, it’s highly recommended for all landlords. This protects them in case the property gets damaged or the tenant can’t pay rent.
Gas Safety Certificate, £45 every year
This is a legal requirement that ensures that all gas appliances and fittings in the property have been inspected by a registered engineer and deemed safe. It needs to be renewed annually.
Landlord License, £500 every 5 years
Depending on where the property is located, landlords might need a landlord license. Contact your local council to find out if you need to obtain one before putting your property up for rent.
Repairs & Maintenance
Regular maintenance is needed to maintain the condition of the property. Most landlords do spend on maintenance either annually or bi-annually. These expenses vary greatly, depending on the size of the property and the necessary repairs that need to be done. Some repairs may be caused by natural disasters, but others are the result of unruly tenants. Although the deposit fee usually covers the cost of repairs for small damages caused by tenants, in certain cases, it might not be enough, and the landlord must shoulder these expenses themselves.
Carbon Monoxide & Smoke Alarm, anywhere from £20 to £50 for the set
All landlords must install carbon monoxide and smoke alarms in their home. The number of alarms needed depends on how big the property is, but as a general rule, there should be one smoke alarm per floor and one carbon monoxide for an average-sized house.
Income Tax, varies depending on income
All profits made off the rental of the property will be included in the calculation of income tax. Most taxpayers pay the basic rate of 20%, while higher-rate taxpayers are required to pay 40%.
Before landlords put up their property for rent, they have to make sure it looks good and is up to standard when it comes to safety. They’ll have to spend on refurbishing and redecorating the entire space. These costs again vary greatly and depend on the landlord’s preferences.
Being a landlord is a tough job, but it can be a very rewarding business opportunity if you know what you’re getting yourself into. Knowing the true cost of being a landlord is the first step in the right direction.