Being a landlord is not cheap, before you purchase a property, there are many considerations to consider before renting to make an income. Assuming your property is a new rental, below are just some costs you could encounter.
- Floor Plan – If you can get permission and the photos from the sale of the property are good then you may be able to, but in many circumstances this is not always possible. Because of property being bought from Agent A and rented through Agent B.
- Marketing Photos – Same as above
- EPC – Required by law to state how energy efficient a property is, currently set at a minimum rating of E, a rating of C is currently being considered by the government. You may be able to reuse the EPC from the sale of your property.
- Inventory – Key to protect your property from damage, without this document claiming from a tenants deposit can be very difficult
- Professional Clean – Optional but it is always good to have the property cleaned before a tenancy starts. This way, tenants would be required to clean the property to the same standard when they leave. If you have good tenants, this is a cost that should only really occur once, then each tenant will pay for the next one, though we understand this is not how the real world works.
- EICR – Electrical Condition Report, once every 5 years
- Gas Safety Certificate – A qualified professional must check for safety every year
- Smoke & CO Detectors – Cheap but a legal requirement
- Landlord Insurance – Sometimes included in your ongoing Estate Agent Fees
- Estate Agent Setup Fees – Depending on your package, agent fees can be as little as 2 week’s rent or up to 4 weeks rent
- Ongoing Estate Agent Fees – 8% to 14% of the monthly depending on your package
- Key Cutting – Tenants can lose keys or you may need to enter the property (with permission) having a spare set of keys for yourself and / or the managing agent is vital.
Now let’s look at a 1 bed unfurnished flat in the South of London rented out for £950 a month.
|Floorplan||Most are included in the cost of photos|
|Professional Clean + Carpet & Appliances||£250|
|Gas Safety Certificate||£59|
|Smoke & CO Detectors||£23|
|Estate Agent Setup Fees (4 Weeks Rent)||£950|
|Ongoing Estate Agent Fees (1st Month @ 10%)||£95|
|Key Cutting (1 Set)||£21|
That’s nearly 2 month’s rent before anyone has even moved in. These calculations are average prices and don’t consider VAT. We can negotiate with estate agents to help lower costs, you may have a friend or family member who can do something slightly cheaper or an estate agent may bundle certain parts into their setup fee. Negotiating with your agent is key.
With landlords losing 2 months rent straight off the bat, it is imperative they have the best inventory they can get to protect their investment. That’s why we created Professional Inventories App.