Buy-to-let maintenance is costing UK landlords 28% of their annual rental income – here’s where to buy to beat it
Leading lettings management Howsy has looked at what proportion of annual rental income is required to maintain the average buy-to-let property and how this differs across the UK.
The research has found that: –
- The cost of maintaining the average buy-to-let investment across the UK currently sits at £2,313, accounting for 28% of the annual rental income available.
- This is based on the 1% rule, whereby budgeting 1% of the purchase price of a property covers the upkeep on an annual basis. Howsy then looked at the current average rent across the market and what proportion of rent is required to cover these maintenance costs and how it differs regionally.
Nationally and Regionally
- Wales is home to the highest proportion of rental income spent maintaining a buy-to-let with 1% of the average property price (£1,639) accounting for 27% of the average annual rent (£6,182), while Scotland is home to the lowest top-line level of maintenance costs at 17%.
- On a regional basis, the East of England is home to the most expensive buy-to-let investment where upkeep is concerned, with this cost accounting for 28% of the average annual rental income.
- The North East is the most affordable at 20% and perhaps surprisingly, London is the home to the fourth-lowest buy-to-let maintenance costs, accounting for 23% of the annual average rent of £20,364.
Locally
- The best investment location to keep maintenance costs low is currently Glasgow, requiring just 13% of the average annual rental income (£10,596) to budget for any unforeseen costs.
- Inverclyde (14%), West Dunbartonshire (14%), Midlothian (14%), Burnley (15%), East Ayrshire (15%), Belfast (15%), Falkirk (15%), Dundee (16%) and Clackmannanshire (16%) were also amongst the lowest buy-to-let locations for maintenance costs.
- In London, Tower Hamlets (20%), Barking and Dagenham (21%), Newham (21%), Greenwich (23%) and Hounslows (23%( were the boroughs home to the lowest buy-to-let maintenance costs as a proportion of the average annual rent.
As always, just shout if you want the figures for your local area or any more comment.
James
PropergandaPR
james@properganda.pr
Buy-to-let maintenance is costing UK landlords 28% of their annual rental income – here’s where to buy to beat it
The latest research by leading lettings management platform, Howsy, has found the cost of maintaining the average buy-to-let investment across the UK currently sits at £2,313, accounting for 28% of the annual rental income available.
Once you’ve purchased your buy-to-let, paid the additional stamp duty and tax requirements, been hit with a lower deposit due to the Tenant Fee Act and paid a local agent’s fees to find you a tenant, you’re ready to rent right?
Wrong. A buy-to-let investment requires constant upkeep to not only keep your tenant happy, but to ensure your investment remains in line with the legal standards required.
Like it or not, this maintenance is a vital part of owning a buy-to-let property and Howsy has highlighted the annual upkeep cost based on the 1% rule, whereby budgeting 1% of the purchase price of a property covers the upkeep on an annual basis. Howsy then looked at the current average rent across the market and what proportion of rent is required to cover these maintenance costs and how it differs regionally.
Of course, different property costs and rents achieved across the UK means that this cost varies regionally and doesn’t have to hit the 28% seen at a top-level across the UK.
Nationally and Regionally
Wales is home to the highest proportion of rental income spent maintaining a buy-to-let with 1% of the average property price (£1,639) accounting for 27% of the average annual rent (£6,182), while Scotland is home to the lowest top-line level of maintenance costs at 17%.
On a regional basis, the East of England is home to the most expensive buy-to-let investment where upkeep is concerned, with this cost accounting for 28% of the average annual rental income. The North East is the most affordable at 20% and perhaps surprisingly, London is the home to the fourth-lowest buy-to-let maintenance costs, accounting for 23% of the annual average rent of £20,364.
Locally
The best investment location to keep maintenance costs low is currently Glasgow, requiring just 13% of the average annual rental income (£10,596) to budget for any unforeseen costs.
Inverclyde (14%), West Dunbartonshire (14%), Midlothian (14%), Burnley (15%), East Ayrshire (15%), Belfast (15%), Falkirk (15%), Dundee (16%) and Clackmannanshire (16%) were also amongst the lowest buy-to-let locations for maintenance costs.
In London, Tower Hamlets (20%), Barking and Dagenham (21%), Newham (21%), Greenwich (23%) and Hounslows (23%( were the boroughs home to the lowest buy-to-let maintenance costs as a proportion of the average annual rent.
Founder and CEO of Howsy, Calum Brannan, commented:
“Covering maintenance costs is an essential part of managing your buy-to-let investment as failing to do so will not only reduce the profitability of your investment as tenants look elsewhere, but it can also land you in hot water legally if your property is not fit for purpose.
Using the one per cent threshold of the purchase price of your property is a sensible place to start when budgeting for maintenance and although it acts as a rough rule of thumb, it should cover everything but the very worst damage to your property.
Of course, the government’s consistent attack on the profitability of the buy-to-let sector could have alternative consequences as landlords cut corners on maintenance to get by, but as our research shows, this doesn’t have to be the case.
The UK rental sector is a vast and varied one and investing in the right property, in the right place, will see operating costs remain palatable and profits remain robust.
However, with technology changing the face of the industry, landlords now have even more options at their disposal when it comes to keeping their investment profitable and all of their costs under one roof.
That’s the exact reason we launched Howsy Protect, as it not only guarantees rent if your tenant falls behind, but it protects against unforeseen repair costs. So rather than keep a chunk of rental income back for a worst case scenario, landlords can pay one consistent, manageable monthly cost and rest safe in the knowledge we’ve got them covered.”
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Primary level – nations
|
||||
|
Location
|
Average Annual Rental
|
Estimated annual maintenance
|
Average house price
|
Maintenance as a proportion of rent %
|
|
England
|
£10,224
|
£2,474
|
£247,426
|
24%
|
|
Wales
|
£6,182
|
£1,639
|
£163,936
|
27%
|
|
Scotland
|
£8,982
|
£1,519
|
£151,945
|
17%
|
|
Northern Ireland
|
£7,524
|
£1,379
|
£137,872
|
18%
|
|
United Kingdom
|
£8,232
|
£2,313
|
£231,265
|
28%
|
|
Secondary level – English regions
|
||||
|
Location
|
Average Annual Rental
|
Estimated annual maintenance
|
Average house price
|
Maintenance as a proportion of rent %
|
|
East of England
|
£10,428
|
£2,908
|
£290,836
|
28%
|
|
South East
|
£11,976
|
£3,225
|
£322,532
|
27%
|
|
South West
|
£9,792
|
£2,566
|
£256,553
|
26%
|
|
East Midlands
|
£7,536
|
£1,936
|
£193,560
|
26%
|
|
West Midlands
|
£7,944
|
£1,987
|
£198,659
|
25%
|
|
London
|
£20,364
|
£4,719
|
£471,948
|
23%
|
|
North West
|
£7,452
|
£1,648
|
£164,822
|
22%
|
|
Yorkshire and The Humber
|
£7,404
|
£1,635
|
£163,541
|
22%
|
|
North East
|
£6,396
|
£1,289
|
£128,932
|
20%
|
|
Ranking – by lowest maintenance cost as a proportion of rent gained
|
||||
|
Location
|
Average Annual Rental
|
Estimated annual maintenance
|
Average house price
|
Maintenance as a proportion of rent %
|
|
City of Glasgow
|
£10,596
|
£1,335
|
£133,453
|
13%
|
|
Inverclyde
|
£7,476
|
£1,033
|
£103,268
|
14%
|
|
West Dunbartonshire
|
£7,559
|
£1,052
|
£105,181
|
14%
|
|
Midlothian
|
£13,008
|
£1,874
|
£187,380
|
14%
|
|
Burnley
|
£5,544
|
£840
|
£84,029
|
15%
|
|
East Ayrshire
|
£6,336
|
£962
|
£96,233
|
15%
|
|
Belfast
|
£8,592
|
£1,312
|
£131,161
|
15%
|
|
Falkirk
|
£8,124
|
£1,245
|
£124,517
|
15%
|
|
City of Dundee
|
£7,920
|
£1,241
|
£124,076
|
16%
|
|
Clackmannanshire
|
£8,124
|
£1,298
|
£129,835
|
16%
|
|
Ranking – by highest maintenance cost as a proportion of rent gained
|
||||
|
Location
|
Average Annual Rental
|
Estimated annual maintenance
|
Average house price
|
Maintenance as a proportion of rent %
|
|
Monmouthshire
|
£7,688
|
£2,722
|
£272,203
|
35%
|
|
Kensington And Chelsea
|
£36,636
|
£12,555
|
£1,255,549
|
34%
|
|
Powys
|
£5,540
|
£1,870
|
£187,006
|
34%
|
|
Suffolk Coastal
|
£8,556
|
£2,873
|
£287,323
|
34%
|
|
Cotswold
|
£11,472
|
£3,843
|
£384,342
|
34%
|
|
Charnwood
|
£6,672
|
£2,230
|
£223,000
|
33%
|
|
Bromsgrove
|
£8,808
|
£2,931
|
£293,123
|
33%
|
|
South Hams
|
£9,312
|
£3,072
|
£307,217
|
33%
|
|
Folkestone and Hythe
|
£7,740
|
£2,552
|
£255,250
|
33%
|
|
South Bucks
|
£18,108
|
£5,943
|
£594,326
|
33%
|
|
Tertiary level – London boroughs
|
||||
|
Location
|
Estimated annual maintenance
|
Maintenance as a proportion of rent %
|
||
|
Kensington And Chelsea
|
£36,636
|
£12,555
|
£1,255,549
|
34%
|
|
Haringey
|
£18,696
|
£5,482
|
£548,162
|
29%
|
|
Richmond upon Thames
|
£22,284
|
£6,532
|
£653,201
|
29%
|
|
Kingston upon Thames
|
£16,680
|
£4,887
|
£488,667
|
29%
|
|
Hammersmith and Fulham
|
£25,404
|
£7,238
|
£723,807
|
28%
|
|
Barnet
|
£18,276
|
£5,205
|
£520,535
|
28%
|
|
Merton
|
£18,360
|
£5,095
|
£509,472
|
28%
|
|
Camden
|
£30,432
|
£8,434
|
£843,449
|
28%
|
|
Bromley
|
£15,852
|
£4,377
|
£437,728
|
28%
|
|
Islington
|
£22,968
|
£6,324
|
£632,427
|
28%
|
|
Waltham Forest
|
£15,708
|
£4,318
|
£431,770
|
27%
|
|
Ealing
|
£17,556
|
£4,749
|
£474,948
|
27%
|
|
Croydon
|
£13,632
|
£3,649
|
£364,882
|
27%
|
|
Hillingdon
|
£15,240
|
£4,074
|
£407,373
|
27%
|
|
City of London
|
£29,352
|
£7,845
|
£784,538
|
27%
|
|
Sutton
|
£14,004
|
£3,736
|
£373,634
|
27%
|
|
Harrow
|
£16,884
|
£4,500
|
£450,028
|
27%
|
|
City of Westminster
|
£36,216
|
£9,512
|
£951,242
|
26%
|
|
Brent
|
£18,420
|
£4,830
|
£483,037
|
26%
|
|
Redbridge
|
£15,816
|
£4,134
|
£413,432
|
26%
|
|
Havering
|
£14,028
|
£3,646
|
£364,579
|
26%
|
|
Wandsworth
|
£22,596
|
£5,851
|
£585,086
|
26%
|
|
Lewisham
|
£15,888
|
£4,094
|
£409,373
|
26%
|
|
Bexley
|
£13,272
|
£3,377
|
£337,693
|
25%
|
|
Hackney
|
£22,008
|
£5,599
|
£559,942
|
25%
|
|
Southwark
|
£19,848
|
£4,970
|
£497,016
|
25%
|
|
Enfield
|
£15,720
|
£3,934
|
£393,381
|
25%
|
|
Lambeth
|
£21,048
|
£5,076
|
£507,586
|
24%
|
|
Hounslow
|
£17,184
|
£4,010
|
£401,045
|
23%
|
|
Greenwich
|
£16,848
|
£3,911
|
£391,097
|
23%
|
|
Newham
|
£17,088
|
£3,632
|
£363,240
|
21%
|
|
Barking and Dagenham
|
£14,328
|
£3,002
|
£300,242
|
21%
|
|
Tower Hamlets
|
£21,636
|
£4,354
|
£435,411
|
20%
|
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