Redstones Lettings

Understanding costs and returns as a landlord

Particularly if you are a new landlord, getting your head around the costs you will incur and your potential return on the property or properties you rent is essential.

Buy to let investing comes from two income streams – rent and the capital growth of the value of the property increasing.

The property market fluctuates, so it is possible to lose money if property values go down, if your outgoings exceed rental yield or if the property is vacant for any period of time. Being a landlord is a medium to long-term investment.

The costs involved are the costs of purchasing the property for rent including stamp duty, valuation, legal costs and mortgage arrangement fees. If you are renting your property as a business, Class 2 National Insurance is payable and so is income tax, which is payable on rental income minus day to day running costs.

Day to day running costs include landlord’s insurance, letting agent’s fees, mortgage interest, annual safety checks, redecorating and general maintenance.

But how about the profit you will earn? Here’s a useful article about calculating rental yield.

Also, if rent arrears are a worry, our Redstones Platinum Total Care service is invaluable, as it offers guaranteed rent paid on time, every time, whether the tenant has paid or not!

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