It is vital landlords manage their finances effectively. While a landlord must ensure they can afford to buy a rental property, there is also a need for a landlord to manage their finances throughout the year. There is a lot of costs associated with letting property, and if you fail to account for these costs, you will struggle to manage your property and business.
Therefore, recent findings from Howsy, a property management platform is well worth considering. The organisation examined the cost of maintaining a rental property, and how much this figure varies across the United Kingdom.
Be aware of the costs associated with letting property
There are upfront costs associated with buying rental property, and there are ongoing costs. Many landlords find the additional 3% stamp duty tax, payable when purchasing an additional property to be prohibitive. There are also mortgage costs, agency fees, tenant finding costs and maintenance costs.
The study suggests that the average buy-to-let in the UK brings an annual return of around £2,000. As a landlord, if you can manage your costs, and perhaps lower them, you’ll find it becomes much easier to obtain a more attractive return on your investment.
With respect to maintaining your rental property, industry experts suggest a good rule of thumb is to budget around 1% of the property’s value in maintenance and repair costs. The average sum UK landlords should put aside is £2,344, but of course, this changes depending on where you are. In the North East, the sum falls to £1,328 and in London, landlords should look to allocate £4,746 for repair and maintenance costs.
Rubery landlords need to budget for repair and maintenance work
According to Zoopla, as of December 2019, the average value of Rubery property is £193,785. Taking the 1% figure, this means Rubery landlords would be advised to allocate £1,937 for repair and maintenance costs, which means accounting for £2,000 makes sense.
Calum Brannan is the founder and CEO of Howsy, and he said; “The buy-to-let sector can be a minefield for the amateur investor and now more than ever, it’s imperative that you do everything you can to maximise the return on your investment. As with all buy-to-let investments, good preparation, organisation, and education are key, and whether you go it alone or have a great management agent if you stay on top of things, a bricks and mortar investment is still one of the best you can make.”
Your personality and nature will likely affect how much money you are confident about setting aside for repair work. You will also find the amount of money you are generating will influence how much you can set aside.
It would be brilliant to provide all landlords with a set figure they need to focus on, but this isn’t the case. Each landlord faces unique challenges, but at Dunedin Sales & Lettings, we aim to provide a bespoke service. If you need any help managing your rental property, contact us today, and we will be more than happy to assist you.