Five Buy-to-Let Costs You Need to Know
The expenses that catch new landlords out.
One in eight landlords underestimate the costs that come with buy-to-let — a homeowner letting out their house might pay as much as £8,359 a year. Here are five that can slip by, so you can plan ahead.
The Tenant Fees Act
In force from June 2019, it stops landlords charging tenants for anything beyond rent, deposits, cleaning, inventory and admin. Breach it and the first (civil) offence can cost up to £5,000; a repeat within five years can become a criminal offence or a £30,000 fine.
Mortgages
Rental income isn’t guaranteed — tenants can leave or fall behind — yet the mortgage still has to be paid. Lenders price in that risk, so expect a larger deposit, higher fees and higher interest rates.
Income tax
You pay tax on your net rental profit: all rental income (rent, and money towards heating, repairs and the like), minus your allowable expenses.
Legal & admin fees
Ticking every legal box costs money: credit checks and referencing, deposit protection, an EPC, a gas safety certificate, landlord and ICO registration, and building insurance.
Maintenance
Keeping a property safe and running is the landlord’s job — annual fire, electrical and gas checks included. The average landlord spends around £765 a year on it.
Budget for these from day one and buy-to-let stays profitable; overlook them and the margins can vanish.
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