Leading
property management platform, Howsy, has looked at the cost of maintaining a
buy-to-let property each year and how this varies across the UK.
Buy-to-let
can be a tricky business if you don’t tackle it properly and there are a whole
host of costs that can trip up the amateur investor. From the more obvious additional
three percent stamp duty tax, to various other tax implications, void periods,
mortgage costs, agency fees, the cost of finding a tenant, and more, Howsy’s previous research shows the average buy-to-let brings an
annual return of just £2,000.
With
the Government’s continued attack on UK landlords, making the most out of your
investment financially can be tough and even when you consider all financial
commitments for a property, many can still be caught unaware by out of the blue
maintenance and repair costs.
Buy-to-let
landlords should squirrel away savings in anticipation of these events and an
industry rule of thumb is an annual budget equivalent to 1% of your property’s value.
So
what does that equate to?
Across
the UK landlords should be tucking away an annual budget of £2,344 to cover
repairs and maintenance, with this rising to £4,746 in London, with the North
East home to the lowest repair costs at just £1,328.
Of
course, markets with higher rent returns may seem promising from an investment
standpoint but the higher the reward, the higher the cost when things do go
wrong. In Kensington and Chelsea, this annual 1% saving climbs to an
eye-watering £12,292, hitting nearly £9,000 in both the Cities of London and
Westminster.
Outside
of London, South Bucks and Elmbridge are home to the most expensive buy-to-let
maintenance costs at £6,091 and £6,019 respectively.
Head
to the likes of Burnley or Blaenau Gwent however, and this yearly maintenance
budget drops to less than £1,000 a year.
Founder
and CEO of Howsy, Calum Brannan, commented:
“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.
While
technology now allows a greater level of control and service when managing your
investment at a lower cost via online platforms, it isn’t just about the
financial side of things. Providing a fit for purpose property is not only a
legal requirement but essential to ensure a happy tenancy and a reduction in
void periods.
Of
course, things can go wrong and having the budget available to fix them is a
must. In the worst-case scenarios, a cash pot equal to one percent of your
property’s value might not be sufficient, but it should cover you for most
eventualities and is a good benchmark to start on.
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.”