It can be hard for new landlords getting their heads around the cost of renting out a property. From interpreting the safety and lettings legislation, to understanding letting agents’ confusing fee structures, it can all get a bit overwhelming. Here’s a guide to the costs of renting out a property for new landlords.
Getting ready to advertise
Before advertising a property it will need an EPC (Energy Performance Certificate – lasts for 10 years and if the property has just been bought this can be taken from the Home Report. Umega can organise an EPC for £65+VAT. Landlords also have to register the property with the local authority at a cost of £65.
Making sure the property is safe for tenants
Before tenants move into a property, landlords need to make sure the property is safe;
- Gas safety certificate – All gas installations (normally a boiler and perhaps a gas hob) need to be checked once a year and an annual boiler service is recommended. Umega can organise a GSC and boiler service for £99+VAT. A battery-powered carbon monoxide alarm is also required and we supply and fit this for £25+VAT
- EICR (Electrical Installation Condition Report) – The fixed wiring in a property needs checked by a certified electrician once every 5 years and any issues flagged up in the report need taken care of. Umega can organise an EICR for £135+VAT and a quote is provided for any remedial works required
- Fire detection alarms – smoke and heat alarms need installed in rental properties in Scotland before tenants occupy. These can be hard-wired or radio-linked and prices vary depending on the number of rooms in the property. Umega can organise 3 wired alarms for £280+VAT and 3 wireless alarms for £290+VAT. A wall mounted fire blanket is also required and Umega can arrange for £30+VAT
- Portable Appliance Testing (PAT) – electrical appliances in rental properties need checked once a year. Umega can organise for £44+VAT
- Legionella Risk – a legionella risk assessment should be completed to highlight any potential risks. Umega can organise one for £60+VAT
For HMO properties there’s additional work and measures that need taken care of prior to letting and more info on these is available here.
The pricing of Umega’s certificates changes from time to time depending on our contractors. You can check up to date pricing in our Know your stuff document.
Letting agent fees
Normally letting agents will charge a monthly management fee and a marketing/set up but unfortunately, with many agents it’s not as simple as that. Many letting agencies will have a list of fees hidden in their managing contracts so it’s worth checking a letting agent’s T&Cs to see what other fees are ‘hidden’ in there before working out all the costs involved. Umega’s monthly management fee is 10%+VAT and our marketing fee for each new tenancy is £250+VAT. We have no hidden fees.
1-2 bedroom city centre properties tend to work best furnished (whereas family homes are often let out unfurnished). That’s not to say that an unfurnished property won’t let; it may just take a bit longer to find a suitable tenant but the tenancy length tends to be a bit longer. If you go down the IKEA route or opt for a furnishing pack it’s about £1-1.5k for a 1 bedroom property and £1.5k-£2k for a 2 bedroom property. Furniture packs are a great way to avoid a Sunday trip to IKEA (and subsequent mammoth building session) as suppliers will deliver furnishings and ‘dress’ the property. An inventory should be carried out before each tenancy recording the condition of the property and all fittings and furnishings. We outsource our inventories at a cost of £95+VAT (following the guidance of Safe Deposit Scotland)
Every property is different and it’s hard to predict how much should be spent on ongoing maintenance. We recommend having a buffer in case unexpected repairs pop up during the course of a tenancy. Generally-speaking it’s worth assuming an annual maintenance spend of £500 (if everything in the property is brand new then it will be less, if the property is ‘tired’ it may be more). Landlords are also liable for the cost of maintaining communal areas including gardens and stairwells. In modern developments this will be covered by a property factor. Landlords will also need to make sure the property and contents are adequately insured. For modern developments, buildings insurance will normally be covered as part of the regular factoring charge. We can provide insurance quotes if required. While tenants are responsible for payment of council tax and their own broadband/TV/telephone accounts, landlords will be liable for council tax for any period when the property is vacant (even if that’s just for a couple of days between each tenancy).
If you’re a new landlord thinking of letting out a property please get in touch with our new business team who will guide you through your responsibilities, our service and the next steps to getting your property on the market and let!