renting out a flat out as a landlord... what outgoings?

[greencrosscode]

What would be my likely outgoings? Just trying to my sums...

Thx.

You 'let' a premises if you are a landlord.

I currently let a second floor two bed, two bath flat in Norfolk with parking through an agent. They take a small percentage of the rent for their fee. If any repairs are needed that comes out of the rent too.

Initially I paid some sort of registration fee, an inspection, epc and something for the advertising.

It has all worked out quite well so far.

What kind of fees/percentages are we talking? Thanks.

Landlord insurance, gas safety check every year (£120 approx) electricity check which comes into force 1st April (£120) needs doing for each new tenancy and then I think every 5 years. Tax.

I don't use an agent. My costs include;

National Landlord Association membership
Credit checks via NRA
Deposit scheme fee for registration (can't remember if there is one as it's been too long!)
Landlords Insurance (via Simply Business)
Annual gas safety inspection
Repairs and maintenance

I do my own inventory, check in and check out.
I find my own tenants (which I then check via the credit checks above). My landlords insurance wouldn't be valid if I didn't do the credit checks.

It is worth remembering that if you pay an agent to manage the property, YOU are still the responsible landlord. And some agents are totally useless and just defer to you anyway, rather than fixing things on your behalf etc. If you decide to use an agent, speak to other landlords about the service they received before you sign up with them!

10-15% is typical depending on service level - finding tenants, references, inventory, management, repairs etc

Void periods at full cost of utilities, council tax etc
Insurance, including damage and non payment
Ground rent/service charge
Repairs and maintenance of boiler and appliances
Redecoration and recarpeting
Tax on income, register for self assessment
Fees if btl mortgage needed

How much would you budget for these?

Insurance, including damage and non payment
Repairs and maintenance of boiler and appliances
Redecoration and recarpeting
Tax on income, register for self assessment

-Agent - 12% + vat (they do everything for that as I live hours away)
-Landlord insurance - obviously depends. Mine is about £250
-gas cert
-tax (as rental income counts as income

But by far my greatest outlay is running costs and repairs. In 5 years I've replaced a boiler and a kitchen and spent countless smaller sums on repairing small leaks, cracks, curtain rails that have come down, garage roof, new shower head, there's always something.

Tax depends on your other income and whether you are in higher bracket or have any unused personal allowance. If you sell in a few years there may be a capital gain liability too.

@greencrosscode

How much would you budget for these?

Insurance, including damage and non payment
Repairs and maintenance of boiler and appliances
Redecoration and recarpeting
Tax on income, register for self assessment

Insurance, including damage and non payment

No one can give an idea as we have no idea what the property is or where it is. you need to speak to an insurance company and get a quote. Could be a couple of hundred or a couple of thousand!

Repairs and maintenance of boiler and appliances
Again depends on age and state of repair of said boiler and appliance

Redecoration and recarpeting
Again - how long is a piece of string - depends on property and finish

Tax on income, register for self assessment
No one can tell you this as it will be dependent on your circumstances.

I think I’ve been quite lucky (touch wood) as I haven’t had to fork out much on repairs.

Ongoing costs
Boiler check £60 annually
Insurance £25 per month
Tax 20% of rental income minus expenses (remember you can now no longer deduct the interest on mortgage payments)
Mortgage payments ??
Letting agent fees 10% maybe of the rent (I started with a letting agent then just decided to do it myself)

One off or semi regular costs:
PAT testing - variable costs
EICR - £200 (if I remember correctly)
Installing interlinked smoke detectors £300
Inventory - free of you do it or £80 through a letting agent
Tenant find service - you could do it free but letting agents generally charge one months rent

I try to keep at least 2 months rent in a pot for any repairs that need done. As I said I’ve been lucky but I’m sure there will be something before long.

Thanks all very helpful. Just trying to get my head around if you can make any money letting a place out. Say a 2 bed for £1000 pcm? Or a 1 bed for 600pcm?

As an aside. I use direct line for insurance and they give you tenant templates for beginning a tenancy so as long as you can find someone then it’s easy to do the legal but yourself. Just make sure you get wage slips, ID and employer reference if possible.

Tax will depend obviously on the income, plus some is offset by the expenditure you've had.
For example if you get £10,000 a year rent, spend £3 (need a new boiler maybe) you'll be taxed on £7k (roughly)
Insurance is maybe £250
Gas inspection £60-200
Electricity inspection - 5 yearly
Redecoration etc - I've just had a 2 bed terrace repainted throughout, cost just under £1400, but that's the first major redecorating in 4 years.
There will be damage and wear and tear every year
Year before last was an expensive one, started with a bird nest in the chimney, ended up with needing the chimney relining and fire replacing!

Letting should be considered as a long term investment not quick profits. The gross figures for rent look appealing but you make much less. I don't think I would bother if I had a mortgage to pay too, unless I was just doing it to hold onto an asset (moved in with a partner for example)

Depends on what condition the property is returned to you in. Nigh on impossible to claim any deposit back from a tenant for damages. I spent 7k on damages recently. The tenant had been there for only 12 months.

Better to let out bigger properties that you can charge more rent for?

Come on OP - how can anyone help you with such a vague question?
Give us some info first. Will the property be mortgaged? Will there be service charges ie within a block of flats? Are you thinking bills inclusive or exclusive? Do you have other income (relevant for levels of tax you will pay).
The most simple answer is that if you have a mortgage, no you won't make money. If you own or buy a property outright, you might. But with the rent levels you are suggesting, you are putting yourself in the danger zone of relatively cheap rentals - where alot of people are before they fall on hard times and then don't pay their rent at all while you pay court costs and bailiffs to evict them so that they can go into social housing. With a max gross income of 7-12k per year, there can of course be years where you make nothing, where repairs can cost more than your entire income. Unless you've got say a £15k buffer sat in an account to cover blips, it's not prudent to become a landlord.

Don’t forget to factor in costs for repairs, damages & maintenance. White goods these days don’t last will need replacing periodically.

@greencrosscode

Thanks all very helpful. Just trying to get my head around if you can make any money letting a place out. Say a 2 bed for £1000 pcm? Or a 1 bed for 600pcm?

Depends on what mortgage you have. Mine more than covers the mortgage and that is all I wanted really. I originally intended to sell the flat but the market was slow and the estate agents suggested I let it. It has been occupied for six months now and I'm content.

To answer your question, you will make a bit of money out of letting. I don't charge a huge rent and am happy to house a young couple with a baby for as long as they want it. It is a lovely flat but no doubt they will want to progress to a small house with garden. When they eventually buy somewhere and move I'll reassess the situation.

I'm in the process of selling a 2 bed flat that I bought as a BTL.

It rented out for £1000 pcm.

Mortgage was £250 pcm.

I owned it for 5 years. After having paid maintenance/insurance/gas and elec checks (and associated repairs)/repairs/fixing damage/agents fees, new tenant fees etc/tax, I made approx £200 a month profit. I'd sunk over 100,000 of my own money into it- so about 2% return on my invested sum.

It wasn't worth it. It was a constant headache and hassle despite having an agent manage it. That's why I'm selling. I can't wait for it to complete and for me not to have to dread seeing the agents number flash up on my phone.

I think the time for individuals to make any kind of reasonable profit on BTL has gone. The increased legislation means its really not worthwhile unless you have multiple properties and make a business out of it.

I'd steer well clear - the stress was just not worthwhile.

I feel your pain @mrsm43s! I've finally got rid of tenants from my property and have it on the market hoping to sell. I feel brighter and breezier already! Never again. I think your 2% return is realistic (although you will have made more in the earlier years and less in the latter due to tax changes on your mortgage). Unfortunately I didn't even make that much because I have a mortgage at 1.84% on my residential home too. I'd have been better off by paying off that mortgage instead of trying to house people and suffer with 2 mortgages and all the tax and all the whattsapp messages from tenants and the never being able to go on holiday. Ugh! Never again.

get some quotes for landlord insurance. It needs to include:

buildings as appropriate
landlord contents
malicious damage
rent guarantee - tenants can move in and pay nothing further and you are currently looking at 2 years to eviction
legal expenses - ditto
home emergency

ask agents for their fees.

tax; it goes on your tax return as normal income, so how much you pay depends on your other incomes.. You can set off some expenses against your income.

greencrosscode - the problem is you are asking questions that are completely meaningless. You could rent out an 8 bedroom mansion for 8000 a month but that wouldn't be very good if you had a 7500 mortgage payment. Or you rent out a family house for 1400 a month with no mortgage or a million different other permutations. The fact that you have seemingly no idea at all about it suggests that becoming a landlord would not be a sensible course of action for you.

My biggest expense is the service charge: £1400-2400/year depending on size of building and amenities. I tru and get tenants to sign as long a lease as possible. I've been burned once- guy paid first months rent then stopped. I had rent guarantee insurance but am still waiting...

daisyphase I'd have been better off by paying off that mortgage instead of trying to house people ...

Oh come on! Really! 'trying to house people'. You're not fucking Shelter. You were trying to turn a profit in a market that has, to date, allowed many better off people to make other less well off people pay their mortgages. Even tho the tenants were often paying more in rent than the mortgage would have cost them.

You just didn't manage to turn a profit.