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First time landlord's guide

This guide is aimed at first time landlord’s but could also prove useful for landlords with previous experience. Follow the links to see each section in detail.


Step 1

Understanding the costs vs return

Income

Buy-to-let investing can come from two potential income streams: from rent and from capital growth of the property valuing going up.

The property market has ups and downs so it is possible to lose money if property value goes down, your outgoings exceed rental yield, or if the property is vacant for a period of time.

So being a Landlord is a medium to long term investment risk.

Expenses

Fees Associated with Property Purchase.

  • Stamp Duty
  • Valuation
  • Property Survey
  • Legal costs
  • Mortgage arrangement fees (If you already have a property with a standard mortgage you will need to seek your Lender’s permission to rent it out)
  • Income tax is payable on your rental income, minus day to day running costs. There are specific rules for overseas landlords
  • If renting your property counts as running a business then you will need to pay Class 2 National Insurance

Day to day costs

It is important to factor in the day to day running costs of a property into your calculations for rental yield.

Here is a list of some of the main costs:

  • Letting agent’s fees
  • Mortgage interest (if you opt for a full repayment mortgage)
  • Redecorating
  • Landlord's insurance
  • Annual safety checks (on the boiler, etc.)
  • Rent insurance (designed to protect you for untenanted periods or against having tenants in arrears)
  • General building maintenance