Cost of maintaining a buy-to-let hits £12k a year in parts of the UK
Leading property management platform, Howsy, has looked at the cost of maintaining a buy-to-let property each year and how this varies across the UK.
Buy-to-let can be a tricky business if you don’t tackle it properly and there are a whole host of costs that can trip up the amateur investor. From the more obvious additional three percent stamp duty tax, to various other tax implications, void periods, mortgage costs, agency fees, the cost of finding a tenant, and more, Howsy’s previous research shows the average buy-to-let brings an annual return of just £2,000.
With the Government’s continued attack on UK landlords, making the most out of your investment financially can be tough and even when you consider all financial commitments for a property, many can still be caught unaware by out of the blue maintenance and repair costs.
Buy-to-let landlords should squirrel away savings in anticipation of these events and an industry rule of thumb is an annual budget equivalent to 1% of your property’s value.
So what does that equate to?
Across the UK landlords should be tucking away an annual budget of £2,344 to cover repairs and maintenance, with this rising to £4,746 in London, with the North East home to the lowest repair costs at just £1,328.
Of course, markets with higher rent returns may seem promising from an investment standpoint but the higher the reward, the higher the cost when things do go wrong. In Kensington and Chelsea, this annual 1% saving climbs to an eye-watering £12,292, hitting nearly £9,000 in both the Cities of London and Westminster.
Outside of London, South Bucks and Elmbridge are home to the most expensive buy-to-let maintenance costs at £6,091 and £6,019 respectively.
Head to the likes of Burnley or Blaenau Gwent however, and this yearly maintenance budget drops to less than £1,000 a year.
Founder and CEO of Howsy, Calum Brannan, commented:
“The buy-to-let sector can be a minefield for the amateur investor and now more than ever, it’s imperative that you do everything you can to maximise the return on your investment.
While technology now allows a greater level of control and service when managing your investment at a lower cost via online platforms, it isn’t just about the financial side of things. Providing a fit for purpose property is not only a legal requirement but essential to ensure a happy tenancy and a reduction in void periods.
Of course, things can go wrong and having the budget available to fix them is a must. In the worst-case scenarios, a cash pot equal to one percent of your property’s value might not be sufficient, but it should cover you for most eventualities and is a good benchmark to start on.
As with all buy-to-let investments, good preparation, organisation, and education are key, and whether you go it alone or have a great management agent if you stay on top of things, a bricks and mortar investment is still one of the best you can make.”
|
Annual maintenance savings pot based on 1% of the average house price in each area.
|
|
|
Location
|
Estimated Annual Maintenance costs
|
|
London
|
£4,746
|
|
South East
|
£3,292
|
|
East of England
|
£2,920
|
|
South West
|
£2,602
|
|
West Midlands Region
|
£2,013
|
|
East Midlands
|
£1,942
|
|
North West
|
£1,677
|
|
Yorkshire and The Humber
|
£1,657
|
|
North East
|
£1,328
|
|
England
|
£2,507
|
|
Wales
|
£1,644
|
|
Scotland
|
£1,550
|
|
Northern Ireland
|
£1,400
|
|
United Kingdom
|
£2,344
|
|
Ranking – by highest estimated annual maintenance costs
|
|
|
Location
|
Estimated Annual Maintenance costs
|
|
Kensington And Chelsea
|
£12,292
|
|
City of London
|
£8,979
|
|
City of Westminster
|
£8,971
|
|
Camden
|
£7,936
|
|
Hammersmith and Fulham
|
£7,165
|
|
Islington
|
£6,610
|
|
Richmond upon Thames
|
£6,508
|
|
South Bucks
|
£6,091
|
|
Wandsworth
|
£6,022
|
|
Elmbridge
|
£6,019
|
|
Hackney
|
£5,666
|
|
Haringey
|
£5,463
|
|
Chiltern
|
£5,385
|
|
Barnet
|
£5,231
|
|
Merton
|
£5,157
|
|
Lambeth
|
£5,156
|
|
St Albans
|
£5,153
|
|
Southwark
|
£5,087
|
|
Kingston upon Thames
|
£5,066
|
|
Brent
|
£4,948
|
|
Ranking – by highest estimated annual maintenance costs outside of London
|
|
|
Location
|
Estimated Annual Maintenance costs
|
|
South Bucks
|
£6,091
|
|
Elmbridge
|
£6,019
|
|
Chiltern
|
£5,385
|
|
St Albans
|
£5,153
|
|
Three Rivers
|
£4,935
|
|
Windsor and Maidenhead
|
£4,865
|
|
Mole Valley
|
£4,750
|
|
Hertsmere
|
£4,678
|
|
Waverley
|
£4,653
|
|
Epping Forest
|
£4,599
|
|
Guildford
|
£4,595
|
|
Cambridge
|
£4,559
|
|
Epsom and Ewell
|
£4,529
|
|
Tandridge
|
£4,480
|
|
Winchester
|
£4,386
|
|
Brentwood
|
£4,320
|
|
Woking
|
£4,281
|
|
Sevenoaks
|
£4,255
|
|
South Oxfordshire
|
£4,231
|
|
Oxford
|
£4,184
|
|
Ranking – by lowest estimated annual maintenance costs
|
|
|
Location
|
Estimated Annual Maintenance costs
|
|
Burnley
|
£846
|
|
Blaenau Gwent
|
£945
|
|
Hyndburn
|
£1,000
|
|
East Ayrshire
|
£1,010
|
|
County Durham
|
£1,033
|
|
Pendle
|
£1,034
|
|
Inverclyde
|
£1,060
|
|
Merthyr Tydfil
|
£1,060
|
|
North Ayrshire
|
£1,085
|
|
West Dunbartonshire
|
£1,091
|
|
North Lanarkshire
|
£1,091
|
|
Blackpool
|
£1,096
|
|
Blackburn with Darwen
|
£1,111
|
|
Stoke-on-Trent
|
£1,121
|
|
City of Kingston upon Hull
|
£1,131
|
|
Hartlepool
|
£1,135
|
|
Rhondda Cynon Taf
|
£1,145
|
|
Middlesbrough
|
£1,172
|
|
Sunderland
|
£1,180
|
|
Redcar and Cleveland
|
£1,185
|
You May Also Enjoy
Buying a Home? What you need to know about asbestos
Hodge Bank introduces 80% LTV on Interest Only Mortgages, helping borrowers maximise their affordability
The end of the ‘Forever Home’? 63 per cent of young homeowners prioritise flexibility and renovation potential over permanence
Ignoring these simple winter property maintenance tasks could cost you big time
Half of first-time buyers delaying until after the Budget