Buy-to-let maintenance is costing UK landlords 28% of their annual rental income – here’s where to buy to beat it

February 27, 2020

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.”

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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