What Are Rental Property Expenses?
Letting Fees
The amount a landlord can expect to pay in letting fees will naturally depend on not only the particular letting agent they turn to, to best advertise and oversee their rental property portfolio, but the services they come to depend upon. Commonly landlords will call upon an agent to help them find their ideal tenant, a service referred to as the let only, coming at the cost of around a week’s rent to the landlord. However, letting agents also offer a far more comprehensive fully managed service seeing them take on every aspect of the tenancy from finding a tenant to carrying out mid tenancy inspections and viewings. However, as can be expected this will come at a far greater cost to the landlord, seeing them hand over roughly 25% of their rental income every month.
Repairs and Property Maintenance
As many landlords have quickly come to realise, property maintenance is a huge undertaking in and of itself and a significant part of being an owner. Whilst some owners swear by regular inspections of their rental property this can become irritable for the occupants and ignores that every potential issues or risk to the tenant’s safety cannot be found during a fleeting visit. Instead, tenants should also be encouraged to bring forward any repairs that are needed, meaning the owner can carry out regular repairs to the rental property, ensuring that the issue at hand not only doesn’t get worse, but the remedy isn’t significantly more expensive.
Buy to Let Mortgage Rates
It goes without saying that for many rental property owners their obligation to settle their buy to let mortgage payment will perhaps be their greatest expense when letting a property. With this being said the amount an owner will be expected to pay their mortgage provider each month will vary depending on the size of the deposit they put down. For those used to residential mortgages, the rates with buy to let loans are not only far higher, but also do not contribute to the settling of the property’s capital; instead, exclusively paying interest on the borrowed amount until the term of the mortgage comes to an end.
Money Saving Tips for Landlords
Type of Deposit Protection Scheme
When taking a security deposit, occasionally referred to as a tenancy deposit from the occupants of a rental property the landlord must always ensure to enter the appropriate amounts into a government-approved deposit protection scheme. Owners are able to enter the sums into two types of schemes, custodial or insurance-based, with the key distinction being the party that physically safeguards the amounts provided by the tenant. Whilst with an insured scheme the owner of the property will maintain possession of the amounts given for the deposit, but this will come at a cost, pushing many landlords to opt for custodial protection.
Good Deal on Landlord Insurance
Whilst the classic advice of taking your time and shopping around can be applied to many aspects of being a landlord, this perhaps is most applicable when searching for insurance cover. Naturally, all landlords will want to come away with the best deal possible, but although it is essential to be protected by these policies, it is redundant taking out cover that is simply not needed. Every property owner’s requirement will carry, those with a sizeable portfolio may find comfort in having all available cover for any scenario, whilst those just beginning their journey as a landlord may need to be more reserved in their approach. Some providers may offer significant discounts for more energy-efficient, secure and safe homes as they will view it as less likely that a claim will be made, whereas some may offer a reduction on your first policy.
What Expenses Can I Claim as a Landlord?
Generally speaking, landlords are able to claim any expenses that relate to the running and regular maintenance of their rental property, significantly reducing their tax liabilities. Typically, this will encompass costs incurred for landlord insurance, letting agent fees, legal costs, accountancy charges, alongside any services paid for such as cleaners, or gardeners. It is also worth mentioning that if the amount the occupant of the property pays each month in rent includes things such as utilities or council tax then these can also be claimed against.
Do I Pay Tax on Rental Income if I Have a Mortgage?
After the introduction of new renting regulations, landlords are now prohibited from deducting the costs of their regular buy to let mortgage payments from their annual rental income to reduces the amount of tax they are expected to pay. Instead, owners will receive a tax-based allowance of 20%, deducting this from the interest of the mortgage payments, essentially meaning landlords will pay far more tax than in previous years.
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