New landlords warned to do their costs more carefully

A lettings expert has urged prospective landlords not to underestimate their costs before they enter the market. She says in particular they should be careful of taking out mortgages and expecting their payments to be covered by rent.

Sarah Rushbrook, director of Rushbrook & Rathbone, a national property management agency, 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.

“Others end up in court, chasing their tenants for unpaid rent which is being withheld due to lack of maintenance. Landlords therefore must remember that buy-to-let is a business and must be treated in this way.”

Rushbrook said that if landlords planned to hold their properties for ten years, they should expect to have to invest in one kitchen and bathroom refurbishment, probably three complete redecorations, and replacement of all the carpets.

She added: “I also would advise to only ever budget for ten months a year rental income to allow for void periods and also to allow 10 per cent for planned and five per cent for unplanned maintenance as well as 10-15 per cent for agents’ fees.

“For example, on a rent of £10,000 a year, £1,500 should be allowed for agents’ fees, £1,000 for planned maintenance and £500 for unplanned maintenance – a total of £3,000, leaving you with a monthly income over 12 months of approximately £575.”

She also said that landlords should allow for buildings insurance and utility bills while the property is empty, an annual gas safety check, inventories, and for flats, annual service charges.

Rushbrook said: “Realistically, therefore, the highest mortgage repayment you should entertain ought to be no more than 65 per cent of the rental income in this case – and probably closer to 50 per cent.

“Letting property should not be a lottery. Proper forward planning of this kind can help build stability in the market, which in the long term will benefit both landlords and their tenants.”

About the author



The Residential Landlords Association (RLA) represents the interests of landlords in the private rented sector (PRS) across England and Wales. With over 23,000 subscribing members, and an additional 16,000 registered guests who engage regularly with the association, we are the leading voice of private landlords. Combined, they manage almost half a million properties.

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