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Landlord ledger: do your sums

Property price

The biggest outlay you’re likely to have is the initial price of buying the property itself. Make sure you purchase the property for the best possible price and understand all the additional costs that you’re likely to incur, such as solicitor’s fees, stamp duty and mortgage arrangement fees. Always seek expert advice if necessary.

Advertising your property

If you’re letting without an agent, then you?ll need to advertise the property yourself. Costs will vary depending on the advertising methods you use and the amount of coverage you’re looking for. Some landlords like to showcase their properties in the local newspaper, while others advertise across the internet-based property portals.

If you give your property to a property management agent, they will market and advertise the property on your behalf this will usually be on their own websites, on the major property portals, in the local press and in their shop window.

Ongoing maintenance

Even the newest of properties will need ongoing maintenance throughout your time as a landlord. Ensure that you factor a slush fund into your initial calculations to allow for funding of repairs and updates as necessary.

Mortgage payments

“It’s essential you do your homework and make sure that there is a rental demand for the type of property you are looking to buy, and ensure that the achievable rent covers your mortgage,” says Lee Shuell, proprietor of Belvoir Oldham.

Many landlords choose variable rate, interest-only mortgages as they can often be among the cheaper mortgage solutions but remember, interest rates can go up as well as down, so make sure you plan for all potential scenarios.

Added extras for your tenants

With the competition between rental properties becoming tougher, you may want to include some added extras to encourage tenants to choose yours these will usually carry a cost and should be added into your business plan from the outset.

Some landlords include weekly or bi-monthly cleaners for the communal areas and fast, wireless broadband in the price, as well as all-inclusive utility and council tax bills. Some add furniture too this all helps to attract tenants by keeping the hassle-factor for them down to a minimum. For the larger properties landlords may also choose to include a gardener.


As a landlord, having specialist insurance is vital. The price of policies vary depending on who you buy your insurance from and what the policy covers. Shop around to get the best deal but make sure it covers all the essentials, such as malicious or accidental damage by your tenant or their visitors.

Have at least two months’ mortgage payments available in your account to cover any mortgage payments that need to be made due to late or missed rent.

Management company charges (if leasehold)

If you buy a leasehold property, you are likely to have to pay annual management charges, as management companies usually look after the communal areas and the building itself. These costs can differ considerably from development to development so make sure you’re aware of the full costings before you commit.

Ask the management company for a breakdown of what is covered by these charges (and what isn’t) so you know exactly what additional costs you will have throughout the year too.

Between tenants

Think carefully about what you?ll have to spend when your property is between tenants. Indeed, you may have a short (or long) void period where you will have to cover the cost of the mortgage yourself.

Additionally, you may also need to spend money on getting the property ready for the next tenant, including minor decoration and cleaning and you may wish to get professional cleaners to do this for you.

Agency fees

If you get a property management agency to find a tenant, or look after your property for you, then you will be subject to a fee which will also need to be factored into your initial calculations.

Property management services range from tenant-find only to full property management and prices will reflect the level of service you require.

Ask your local lettings agency for their fee structures before you invest in the property. 

Your check list…

” Property price

” Advertising and marketing

” Renovation costs

” Ongoing maintenance

” Mortgage payments

” Added extras for your tenants

” Specialist insurances

” Periods of void

” Management company charges (if leasehold)

” Professional cleaning between tenants

Mike Goddard is founder of specialist letting company Belvoir

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