People invest in buy-to-let properties in order to give themselves an extra income stream, but it’s important to understand that there are costs involved in being a landlord too.
Buy-to-let has had its ups and downs since the 2008 financial crisis, but it still has much to commend it providing you go into it understanding the potential risks as well as the rewards.
First of all, there are the upfront costs associated with purchasing a property. Many of these apply whether you are buying to let or to occupy. There’s the cost of the property itself, plus there’s stamp duty if the property is more than £125,000 – though note you only pay duty on the amount above this figure.
One cost that is undoubtedly needed is that of a Removals Company Bristol business that will be able to help you move furniture from one property to another. They have trained staff who will meet your needs and can even look at providing storage options if that’s something you might need. If this is something you need please look at options including www.imoveremovals.co.uk to get the best advice possible.
You’ll also have to pay the costs associated with concluding the deal, so valuation fees and survey fees as well as your solicitor’s charges for conveyancing. If you need a mortgage there will be an arrangement fee. Note also that if you currently own a property on a mortgage and decide to rent it out, you must inform the lender.
If you are setting up in business as a landlord for the first time, your income from letting the property will be subject to income tax. You may also have to pay Class 2 National Insurance contributions if your activity is run as a business.
Once you have acquired a buy-to-let property there additional costs involved in administering it. Of course, you will have mortgage payments to meet, and if you employ a letting agent they will take a percentage of your rental income. You may also consider rental insurance to guard against non-paying tenants.
You will also have to pay for annual safety inspections on any gas appliances. Then there will be ongoing maintenance costs to keep the property in good order with any necessary repairs. You will probably also need to redecorate the property every few years.
All of these things need to be taken into account and offset against your likely rental income before you make the decision to invest.