As a knowledge-led, Property Management company we’d like to think we know the industry pretty well. New-to-the-market landlords often ask us what are the costs of being a landlord? For some, property investment is second nature, but for those who perhaps fall in to the industry or are exploring other revenue streams, Seraph are here to help. A property investment can be very profitable, but can also come with certain financial restraints and if not dealt with effectively can become a time-consuming task.
Using a local and reputable letting agent, that communicates with your Property Management company is a great way to ensure there are no void periods at your property. If tenants are on a periodic contract, they must provide a minimum of one month’s notice, which gives a letting agent enough time to let your property for the day after the existing tenant vacates. This is different to if you have a student property to let. Helping you to reduce your void periods not only eliminates rental voids but also council tax and utility bills that you would be responsible for during an unoccupied period.
Providing a safe home for your tenants is a priority and is also a legal requirement. There are annual checks such as gas safety checks which need to be carried out on each appliance by an approved engineer. Smoke alarms and carbon monoxide alarms are also a legal requirement in rental properties. There must be at least one smoke alarm on every storey of a property, as well as carbon monoxide alarm in any room where solid fuel is used. Landlords are also encouraged to install these alarms in all rooms with gas appliances. These must be tested at the beginning of each tenancy to avoid fines of up to £5,000. See our recommended gas engineer.
The regulations for landlords and rented accommodation is ever-changing. It is important to keep an eye on this as regulations can differ between England, Wales and even councils. Rent Smart Wales is a licensing scheme required for anyone who owns and rents out a property in Wales, landlords must register and then either use a licensed agent or obtain a license themselves. Another example of the legislative changes is the Energy Performance Certificates (EPCs), since 2007 these have been required for a rental property, then in 2012 landlords had to produce an EPC on a property before it can be marketed and in 2018 the law states that landlords must meet a minimum requirement of an E rating on an EPC.
Landlords with a buy to let investment could require multiple insurance policies against the investment. Building insurance will cover damages such as fire and flood and will also protect your monthly rental income from your tenants whilst repairs are being made. You may also wish to take landlords liability insurance, contents insurance and rent guarantee.
In Cardiff, the majority of rental properties are fully furnished and therefore your maintenance and upkeep costs may be slightly higher as a result. It is the landlord’s responsibility to ensure everything is in working order, including boilers and appliances and in addition, should furniture need to be replaced to due wear and tear this would also be your responsibility. The type of property and type of tenant you have would affect the average cost of repairs. E.g. a student HMO with annual tenancy changes may experience higher wear and tear than a 1-bed apartment with a long-term tenant.
It may be unfortunate that from time to time a tenant may default on a rent payment in which you would need to have enough reserves in case this happens to avoid default on any potential mortgage payments. As well as the direct consequences of rent arrears other legal costs, such as serving a Section 8 Notice (for an eviction) and court proceedings may also come at a price. Research from the Residential Landlord Association (RLA) found that 27% of landlords had to remove or evict a tenant last year.
To summarise the cost of being a landlord can vary depending on the size of your portfolio, type of property and tenancy. You may find that using a Property Management company can help save you time and money as they work on your behalf taking care of your property and tenants. You may find that using a licensed agent will also allow you to remain compliant with the ever-changing legislation that landlords face. To make an enquiry for Seraph Property Management to look after your property portfolio, contact us today.
Seraph Property Management also provides investment and asset services, as well as block management, purpose built student accommodation, commercial properties and facilities management