With rents on the increase, landlords can be forgiven for feeling more comfortable than in recent times about managing their running costs. However, experts have warned that a number are not budgeting for essential payments.
Unforeseen maintenance costs, rent arrears and tax payments can all slip through landlords’ budgeting allowances, particularly for those landlords who are inexperienced.
A common problem, according to Sarah Rushbrook of Rushbrook and Rathbone letting agents, is that too many landlords are simply taking rental income vs. mortgage payments into account when entering the buy-to-let market. As an alternative, Rushbrook suggests that landlords should see their property as a ten-year investment. In addition, she thinks buy-to-let landlords should factor in either a kitchen or bathroom replacement, alongside three redecorations over this period, into their budgets.
Malcolm Harrison of the Tenancy Deposit Scheme, shares Rushbrook’s views. Furthermore, he is of the belief that landlords should ensure tenants assume responsibility for utility and other bills at the beginning of the agreement. He also urges landlords to make sure that they have suitable landlord insurance, alongside recommending that new landlords use letting agents to manage their property.
Buy-to-let landlords must recognise that their investment is for the long-term and will more likely be more costly than they first anticipated. By following advice however, there is a great deal of profit to be made in the market.