Whether you’re new to the rental market or you’ve been a landlord for years, you’ll most likely run into some unexpected costs and fees, so it’s important to be prepared.
To help you get the best out of your investment, we’ve compiled a list of hidden costs that every landlord should know about.
Fire safety
As a landlord, you are legally obligated to install a smoke alarm on each floor, and if you have a solid fuel-burning appliance, a carbon monoxide alarm must also be fitted on that floor.
Additionally, if your property is a House in Multiple Occupation (HMO), you will have further fire safety responsibilities, such as providing fire extinguishers.
Related: What is a landlord duty of care?
Safety certification
There are several key safety certificates to attain before you can welcome in any tenants. For example, a property that has gas will need inspecting and certifying on an annual basis by a Gas Safe registered engineer.
Electrical safety inspections are also essential, and any portable appliances will need to be ‘PAT’ tested. It’s also a legal requirement for the property to have an Energy Performance Certificate, which assesses the home’s heating and insulation.
Landlord insurance
Specialised landlord insurance is a necessary measure, as a standard home insurance policy will not cover the unique risks that landlords face.
When it comes to insurance, make sure to carefully read through the terms and conditions to find out exactly what coverage is being offered. Fundamentally, every landlord at least needs buildings cover, but you should also find out what additional needs your specific property has and weigh up the different options available.
Landlord income tax
Any profit made on letting out properties will be subject to taxes. In order to keep on top of income tax, make sure to safely file away all receipts and important documents for referral.
Getting your finances in order can be a complicated process, so paying for the services of a specialist landlord account may be a worthwhile investment.
Vacant properties
Vacant - or void - periods are to be expected from time to time, so it’s important to prepare for both short and longer periods where the home is not occupied. You will need to allow time to turnover the property in between tenants, advertise the home, and screen your next suitable tenant.
During this time, you may need to cover costs such as council tax and decorating supplies, so make sure to set aside an end-of-tenancy fund and an emergency pot just in case a vacant period goes on longer than expected.
Related: What is tenant referencing?
Advertising costs
One of the biggest advantages of using a letting agent is that they will take care of the marketing for you. If you’re taking the ‘DIY’ landlord route, you’ll need to budget for photography and advertising to attract tenants, and you may also need to account for covering longer vacancy periods as sourcing a new tenant can take time.
Related: Why landlords are considering switching to a managed let
How to plan for the unexpected
Some hidden costs are inevitable, while others can be avoided through vigilance and preparation. The best way to achieve financial peace of mind as a landlord, is to ensure you have covered the following:
- Take out residential landlord insurance to cover unexpected issues.
- Set aside a contingency fund for things like professional cleaning, repairs, and redecorating.
- Keep documents and paperwork in order and compliant with data protection regulations.
- Pull together a contact sheet of trustworthy tradespeople whom your tenants can contact when needed.
- Create a maintenance timetable so that you know which jobs have been completed recently, and which need revisiting.
For more help with your rental property, contact Parkers’ expert lettings team today
