A lettings expert is urging prospective private landlords not to underestimate their costs before they enter the property market, and warning the business is more complicated than just getting a mortgage and expecting the tenant to pay for it via a rental charge.
Sarah Rushbrook, director of Rushbrook & Rathbone, a national property management agency, feels that if a private landlord plans to hold a property for a decade, they should expect to have to invest in one new kitchen and a bathroom refurbishment, probably three redecorations of the property, and replacement of carpets in every room. She is also advising to only ever budget for ten months per year rental income as this will allow for void periods as well as unplanned maintenance and 10-15% for agents’ fees.
Ms Rushbrook said: “More people are considering investing in buy-to-let, but it’s surprising how many only take mortgage repayments versus rental income into account when looking at affordability. All too often, they fail to remember that where rented property is concerned – unlike stocks and shares, for example – there is a need for continued, long-term investment in the form of maintenance. As a result, we have seen a significant percentage of new buy-to-let landlords end up selling their properties again within a couple of years, simply because they have underestimated the costs involved.”
Landlords should always allow for expenses such as landlord insurance and utility bills even while the property is empty. Then there is the yearly gas check, inventories, and for flats, an annual service charge. Private landlords can easily end up in court, chasing their tenants for unpaid rent which they have withheld due to lack of maintenance. Landlords must remember that buy-to-let is a business and must be treated in this way at all times.