Rent Cost

Summary: Information covering rental cost for landlords and tenants including how to budget and plan for costs such as preparing a house for rental and what ongoing costs and responsibilities for both landlords and tenants need to be considered.

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Houses in a row

Budgeting: What Will It Cost To Let My House Without An Agent?

This series of guides has been put together to give you the information you need to let your property without using an agent. It has been written by Experts at Riley Marshall an experienced London Estate Agent with unrivalled knowledge of the rental business. Who better to pass on trade secrets?

Even if you are letting out your property without an agent there are some legal responsibilities and related costs that you need to bear in mind.

Budgeting - Planning Your Costs

Never underestimate the work involved in the successful letting of your property. You need to be prepared to spend time and money on your investment to ensure it provides you with the returns you desire.

A checklist of costs for renting your property is included below:

Costs To Include In Your Financial Planning

  • Advertising
  • Mortgage payments
  • Ground rent and service charges if applicable
  • Council tax and utility bills if the property is empty
  • Refurbishments or any expenses involved in bringing the property up to the required standards
  • Providing and replacing furniture and furnishings – or removal and storage
  • Legal fees
  • Income tax
  • Insurance – buildings, plus any contents and fixtures that are yours
  • Void periods – times between lets that the property is empty. This can be around 40 days a year* depending on the area.
  • Major repairs

You should also be aware that although generally the trend is for rents to increase year-on-year, in some situations rental prices can drop. Make sure your budget allows for fluctuations in the market.

*BDRC Continental survey conducted in 2012 reported that "over a third (37%) of landlords interviewed experienced voids.... with 47% of voids lasting longer than 40 days" http://www.bdrc-continental.com

Initial Costs – Getting Your Property Ready To Let

Prior to letting out your rental property you need to ensure that you can do so legally. To protect your interests and make sure you are acting within the law you should consider whether the following affect you.

  • Mortgage lenders consent – contact your mortgage lender to advise them of your plans unless you already have a Buy-to-Let mortgage.
  • Permission from buildings and contents insurers – bespoke insurances are available. You can find out more about specific Landlord insurance online
  • Freeholder permission – If your property is leasehold you will need to gain permission from the freeholder to sublet it.
  • EPC - Landlords have to provide potential tenants with an Energy Performance Certificate outlining the energy efficiency of the building. More information on EPC's can be found on the www.gov.uk website under energy performance certificates
  • House in Multiple Occupation (HMO) – This type of property requires a landlord to register with the local authority and to pay for a licence. More information on HMO's can be found on the www.gov.uk website under houses in multiple occupation
  • Register with local authority (if necessary in your area) – Newham became the first borough to require this for all private lets in 2013. Check the regulations with your  local authority.
  • Electrical safety – It is good practice to get wiring and appliance tested.
  • Gas safety – properties with gas fittings and/or appliances must have an annual Gas Safety Inspection and Report issued by a Gas Safe Engineer. This should be issued before the first let and renewed each year.
  • Furniture and furnishings – These must comply with current fire safety regulations in rental property and carry a relevant label. For more information click the link below.
  • Fire safety regulations – provide fire safety equipment, working smoke alarms, and escape routes (if applicable). For more information click the link below.

More information on safety in rental property is available from the .gov website.

Landlord’s Ongoing Costs

Tenants are required to maintain the property in, what is known in legal terms as, a ‘tenant-like’ manner. This means they would be expected to keep the property clean and free from damage, and maintain the garden (if there is one). They should also replace light bulbs, and batteries in equipment such as smoke alarms, but they are not expected to make alterations, redecorate or carry out repairs to the fabric of the rented property, unless they have caused damage.

To help you with your budgeting plans bear in mind that the following costs will remain your responsibility, as the landlord, throughout the time you own your rented property.

  • Maintenance - upkeep of the property such as appliance repairs and decorating
  • Major repairs - structural repairs such as replacing windows or roof repairs
  • Refurbishment – replacing worn out furniture and appliances. Note this is due to wear and tear and not damage caused by the tenant, which would be the tenant’s responsibility
  • Mortgage payments
  • Ground rent and service charges if applicable
  • Expenses involved in complying with regulations relating to rental property
  • Empty Property costs - council tax, and utility bills
  • Legal fees – renewal of agreements, dealing with disputes etc
  • Income tax – including overseas regulations if applicable
  • Insurance – buildings plus any contents that are the landlord’s
  • House in Multiple Occupation (HMO) – licence's and regulations (if applicable)

Tenant’s Costs And Responsibilities

Once they move in to your rented property the tenant becomes responsible for the following:

  • Council tax and Utility Bills – unless you have included any of these in the agreed rent.
  • Insuring their own possessions
  • Maintaining the garden – if any
  • Keeping the property clean and tidy and free from damage – they are not responsible for ‘fair wear and tear’.
  • Replacing small items such as batteries and light bulbs
  • Keeping drains and gutters free of debris, cooking fat unsuitable materials such as nappies etc.

Your Tenancy Agreement may also outline other responsibilities that the tenant takes on which should be agreed prior to preparing the agreement ready for signing.

Too Much To Think About? – Call Your Local Agent

If keeping track of all these expenses and maintenance tasks seems too onerous you could consider paying an agent.

Using an estate agent to manage your property includes the following plus points:

  • Up to date knowledge of legal requirements
  • A database of reliable tradesmen
  • Time to arrange works and let tradesmen in
  • Experience of managing works
  • Ongoing inspections of the property and reports on condition
  • Tax records
  • Managing bills for the property

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