Costs involved in running a buy to let property

Unfortunately the spending doesn’t stop after the deposit and buy to let mortgage. It is a large investment, so you have to be prepared to pay for all the small extras that come with it.

If they are ignored, your investment could be at jeopardy. It is worth noting, however, that your rental yield should cover most of the following costs. Below is a detailed list of all the mandatory costs as well as optional costs (which may or may not apply to your situation).

Essential costs

If the property is in occupation or soon will be, you will need to pay for:

  • An Energy Performance Certificate (EPC). This provides information on the energy efficiency of a property and must be available to tenants if they ask. 
  • Gas safety checks. You must ensure you have an up-to-date gas safety certificate to show all gas appliances have been fitted safely in the property. You will need to arrange annual inspections with a certified engineer – use the Gas Safe Register to check they are listed.
  • Repairs and refurbishment. As a landlord, you’ll need to be prepared to replace and repair items during a tenancy as well as in between. You will most likely need to clean the property throughout before a new tenant moves in. As it is an on-going responsibility, you’ll need to set aside around 20% of your rent per year.
  • Landlord insurance. Like any homeowner, you will have to take out buildings insurance for the property. For extra protection against damage caused by tenants as well as a rent guarantee service, you can take out landlord insurance which can cover buildings and contents insurance too.

Optional costs

  • Accountant fees. If you feel you would like assistance to sort out the finances of your buy to let property, including tax returns, an accountant will help.
  • Solicitor fees. If you need a solicitor to draw up a tenancy agreement or for any other legal duties, you will need to pay a fee for their service.
  • Letting agent fees. You may decide to hire a letting agent to market, oversee and run the rental property for you. Many letting agents offer a full management service, charging between 10% and 12.5% (plus VAT) of the monthly rent.
  • Advertising and marketing. Alternatively, if you choose to manage the property yourself, you’ll need to pay a small amount to advertise the property to prospective tenants. This could include newspaper ads, noticeboards and websites.
  • Council tax. Most tenants are responsible for paying council tax themselves. However, you may have to pay for this if you’re letting a house in multiple occupation.
  • Ground rent – leasehold. If you are letting out a leasehold property, you will be responsible for the ground rent, including a service charge. This could be for maintenance and security costs.
  • Electrical safety checks. It is wise to have annual safety checks to ensure all electrical appliances are in good working order and are safe to use.
  • Utility bills. Unfortunately, you may be held liable for outstanding utility bills if they have been left unpaid by the tenant.

Further to these expenses, you may have to cover the cost of void periods when there are no tenants occupying the property.

If you’re interested in buying rental property, a bridging loan can provide quick, short-term funding until a buy to let mortgage can be arranged. For more information, visit our buy to let bridging loan page.

Buy to let bridging rates

Use this link to calculate indcative bridging loan rates with broker and admin fees also

This information should not be interpreted as financial advice. Bridging loan rates are subject to change. Speak to our advisors for a loan illustration.