{"id":1332,"date":"2020-02-29T12:24:13","date_gmt":"2020-02-29T12:24:13","guid":{"rendered":"https:\/\/www.rentila.co.uk\/blog\/?p=1332"},"modified":"2025-11-07T15:03:57","modified_gmt":"2025-11-07T15:03:57","slug":"the-hidden-costs-of-being-a-landlord","status":"publish","type":"post","link":"https:\/\/www.rentila.co.uk\/blog\/the-hidden-costs-of-being-a-landlord\/","title":{"rendered":"The hidden costs of being a landlord"},"content":{"rendered":"
<\/div>\n

As with everything in life, things are never quite as simple as you may think. If you\u2019re a new landlord or you\u2019re thinking about letting property as a career or side hustle, there are hidden costs that you need to budget for. If you only account for mortgage costs when setting a rental value you could be in for some nasty surprises down the line.<\/p>\n

Before you even advertise your property for rent you need to account for several hidden costs. You need to be in a financial position to deal with the unexpected costs you may encounter. This means you should always have a contingency fund. As a rule of thumb, it\u2019s recommended that you have around 30% of your gross annual rental income set aside to deal with hidden costs such as advertising for new tenants, repairs, and redecoration.<\/p>\n

<\/p>\n

Agency fees<\/h2>\n

If you’re just taking on a property or two, then it\u2019s likely you may do everything yourself. However, if you have a portfolio of properties or have too many other commitments you may choose to use a letting agency. They can help you advertise, reference tenants, and deal with the day-to-day management of collecting rent, maintenance, and repairs. But this all comes at a hidden cost that you must incorporate into the rental value.<\/p>\n

Wear and tear<\/h2>\n

It’s great to have tenants that stay for extended periods. This saves you a heap on lost rental income while the property is empty and advertising for new tenants. However, when a tenant does leave after staying for a year or longer, there will be wear and tear to your property that you cannot reasonably or legally deduct from your tenant\u2019s deposit.<\/p>\n

At the very least, if your tenants have stayed a few years, the property will need a fresh coat of paint to make it look fresh and appealing to new tenants. And furniture such as the sofa may need deep cleaning or replacing. Make sure you\u2019ve accounted for these hidden costs in the rental value and that you keep that money set aside.<\/p>\n

If you\u2019re renting a property for \u00a3500 a month, if you set aside \u00a3100 per month or \u00a31,200 each year you\u2019ll be able to deal with replacing furnishings, appliances, and redecoration.<\/p>\n

Don\u2019t rely on being able to dig into your tenant\u2019s deposit<\/a> to meet these costs as you need to return this. It\u2019s not yours.<\/p>\n

Accidents<\/h2>\n

Anyone can have an accident but when you are a landlord these can be costly affairs. It only takes an accident or two, such as a broken window or a ruined carpet and you\u2019ll soon find that a month\u2019s deposit is insufficient to cover the repairs.<\/p>\n

\n

Good to know<\/h3>\n

Fortunately, you can claim for this if you take out accidental damage cover with landlord\u2019s insurance. But be aware, that with all insurance, as soon as you claim your premiums go up. Depending on the damage you may choose to cover the costs from your contingency fund.<\/p>\n<\/div>\n

Electrical fires and appliances<\/h2>\n

All white goods in your rental property must be checked by a qualified individual and be PAT tested<\/a>. This includes heaters and lamps and it\u2019s important to know that if your tenants bring their own appliances, then this could invalidate your insurance.<\/p>\n

It\u2019s always wise to arrange a time to inspect your property periodically and if you see any appliances that aren\u2019t yours, you can ask your tenants to remove them from the property. Remember that fires from faulty electrical appliances can cause serious damage to your investment as well as endangering lives.<\/p>\n

British weather<\/h2>\n

The UK is fortunate in that we don\u2019t tend to suffer from earthquakes, tornadoes, and tsunamis. But we do suffer from storms and freezing temperatures during the winter. This can typically lead to burst pipes and damage to the roof of your property. You can send a friendly text message to your tenants during a cold weather snap or after a storm, to check all is okay.<\/p>\n

This a good way to deal with any issues promptly and help you prevent further damage which can be costly if left. You should always have good tradesmen available such as an electrician and a plumber, in the event of an emergency. You don\u2019t have to rehouse your tenants if the property cannot be inhabited. But can\u2019t charge your tenant’s rent for any days they are unable to live there.<\/p>\n

Insurance<\/h2>\n

If you are getting into the buy-to-let market, and are not one of those rare individuals who own or can but property outright, then your mortgage provider will insist that you get landlord\u2019s insurance.  Even if you do own the property outright, landlord\u2019s insurance is a very good idea. It can cover you for eventualities we have mentioned, such as storm damage and damage from tenants.<\/p>\n

Landlord\u2019s insurance can also help you cover your mortgage for other eventualities. That includes if you need to evict non-paying tenants and if a tenant were to sue you for having an accident in or on your property.<\/p>\n

CP12<\/h2>\n

The vast majority of UK homes have central heating powered by a gas boiler. And many homes also have a gas fire, gas cookers, and gas hobs. If you rent a property, you absolutely must get an annual Landlord\u2019s Gas Safety Certificate<\/a> often known as a CP12 from a registered corgi gas engineer. It\u2019s the law.<\/p>\n

Certificates are not a standard price as it varies depending on the number of gas appliances in the home. You can expect to pay anywhere up to \u00a3150 for the certificate alone. You\u2019ll need to pay extra for repairs and maintenance that is required.<\/p>\n

Paying the taxman<\/h2>\n

Many new or potential landlords don\u2019t realise that rental income is taxable. You must declare your rental profits to HMRC, and the tax you owe depends on your total income, your tax band, and any allowances you qualify for. The property allowance may reduce how much of your rental profit is taxed.<\/p>\n

For example, if you earn \u00a315,000<\/strong> in rental profit across your properties and you\u2019re in the basic-rate tax band, you might owe around \u00a33,000<\/strong> in tax. If your total income places you in a higher band, that liability could increase significantly. Failing to budget for this throughout the year can cause serious cash-flow issues.<\/p>\n

\n

Good to know<\/h3>\n

You don\u2019t need to pay tax on the gross rental income as you can deduct for the expenses you pay such as the interest part of your mortgage, landlord\u2019s insurance, agency fees, and items you replace when due to wear and tear.<\/p>\n<\/div>\n

FAQs<\/h2>\n

What hidden costs do new landlords often overlook?<\/h3>\n

Beyond mortgage payments, landlords face expenses like maintenance, safety certificates, insurance, void periods, service charges, cleaning, and legal or accounting fees. Unexpected repairs and tenant turnover can add up quickly if you\u2019re not budgeting for them.<\/p>\n

Why are void periods considered one of the biggest hidden costs?<\/h3>\n

When the property is empty, you still pay the mortgage, bills, and council tax\u2014but no rent comes in. Even short gaps between tenancies can affect annual profit, so good tenant retention and efficient marketing are essential.<\/p>\n

How can landlords prepare for unexpected costs and avoid financial surprises?<\/h3>\n

Build a contingency fund, usually 5\u201310% of annual rent. Keep up with inspections to spot problems early, review insurance regularly, and track all expenses. A proactive, well-organised approach helps prevent small issues turning into expensive emergencies.<\/p>\n

Hidden Costs: Important things to remember<\/h2>\n

Being a landlord is not just the simple equation of rental income minus your mortgage. You must consider all these things before you take on board a rental property and set the rental value.<\/p>\n