What are the hidden costs of being a landlord?

Buying a rental property can be a profitable investment and help towards your retirement fund, but new landlords often underestimate the costs involved. Here are some of the expenses you might not see coming. 

There’s more to being a landlord than sitting back and collecting the rent. Most landlords expect some paperwork and the odd repair bill. However, here are the other hidden costs that are often overlooked. 

If you’re a glass-half-full kind of person, it’s tempting to jump in and figure it out as you go along. But that kind of thinking leads to a bad landlord… or a broke landlord. So, let’s dust off the calculator and find out whether it’s a good idea to take the first step. 

There are two types of costs

Basically, there’s the kind you see coming and the kind that come out of nowhere.

Mandatory costs

These are the costs you need (often by law) to become a landlord and market your property to potential tenants. 

Want to know more about your rights and responsibilities as a landlord? Read our other article for the low-down. 

Circumstantial costs

Depending on your circumstances, most landlords will need to consider at least some of the things on this list: 

As weird as it sounds, some of the most painful costs are not even ones you need to pay

Empty periods

Unless you’re incredibly lucky and find the ideal tenant who stays for decades, there will be periods when the property is vacant. You’ll need to factor in one or two months per year to allow for changes in tenants, although this depends on the area. Your lettings agent should be able to advise you based on their knowledge of the local area and market conditions. 

Letting agency fees

This is the last one the list for a reason. 

Firstly, landlords can choose the level of support they need so the costs vary. At Keatons, our services range include Essential, Financial and Comprehensive level, which is calculated as a percentage of the rent.

For landlords who spend time out of the country or would like a more hands-free experience, our comprehensive level includes check-ups and emergency cover. In other words, complete peace of mind and minimal effort. 

We’re up-front about our fees and you can view our prices here. We are also proud to achieve higher rents than other lettings agents in East London and we have one of the lowest rent arrears in the industry. As our grandmother’s used to tell us: ‘You pay for what you get.’

When you factor in these benefits, we believe that building a long-term relationship with a good estate agency is one of the best ways to minimise unexpected costs. 

And let’s not forget… 

Although we’ve covered the running costs of being a landlord, new landlords should also remember to budget for increased stamp duty and prepare themselves for paying income tax on earnings on the yield. To find out how much rent to charge and calculate your rental yield, see our other article on how much rent to charge in London

Final thoughts

Like most things, becoming a landlord is a learning curve. You will gain experience over time, but part of our job as London estate agents is to prepare you for the reality and help to protect your investment. If you’ve got your head around what your balance sheet might look like and you still decide to become a landlord, then finding a local estate agent is the next step towards letting your first property. At Keatons, we can help with everything from buying a great investment property in a promising area, right through to finding excellent tenants and making sure everything runs smoothly. 

See our full list of property advice articles in our Knowledge Centre

About Keatons

Keatons has been based in East London for over 20 years and has since expanded to the north and south of the city. We have an outstanding Trustpilot rating from customers and we are known for helping sellers and landlords achieve the best possible market price for their property. To find out more, visit our website

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