How Much Does It Cost A Landlord To Operate An Investment Property?

A landlord has many potential costs associated with renting out an investment property such as maintenance expenses. This month, Kent Reliance For Intermediaries has published a report called “The Finance of Investing: Tracking landlords’ costs and economic contributions” that landlords may find of interest – a copy of which can be viewed on their website but, below, we highlight some of the data.

Operating an investment property is a significant expenditure for a landlord
The average cost of running an investment property is considerable.

The average cost of operating an investment property excluding mortgage repayments is £3,632 per annum with this equating to 34% of the average rental income. This is a sizeable increase in what it cost back in 2007 when it cost an average of £2,918 per annum.

The areas and annual amounts spent making up the figure of £3,632 were: –
Ground Rent £62, Insurance £181, Servicing, maintenance and Property upkeep £1,025, Service Charges £312, Licensing Fees £41, Other £198, Utilities £170, Letting Agents fees £870, Voids £652 and Legal/accountancy £121.

As you can see, maintenance costs make up the biggest expense followed by fees to letting agents. Mortgage repayments have not been included in the above figures but, if they had been, it is quite possible that they would have been the biggest amount of expenditure in a number of cases. The average time that a property is left empty every year (void) is three weeks.

It may not come as a surprise to read that landlord’s expenditure, excluding mortgage costs, is greatest in London with the average amount spent being £6.535 per annum. In second place was the South East with £3,691 per annum and in third place was the East of England at £3,212 per annum. The area with the lowest expenditure incurred by landlords was the North East with costs of £1,895 per annum.

The area that landlords had the least expense not including in London was Blaenau Gwent in Wales with a figure of £1,320 per annum. The most expensive area outside London was South Bucks at £5,105 per annum. As you can see, there is a considerable difference between the cheapest and most expensive areas.

It is interesting that landlords expect to reduce their expenditure on letting agents by 28%, legal and accountancy by 24%, maintenance and property servicing by 21%, utilities by 17%, other by 16%, mortgage interest by 15% and insurance by 15%.

We trust that our readers who are landlords have found the above statistics to be of interest. We will continue to provide interesting articles.

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