Landlords in the North West of England are benefiting from investing in the the third cheapest region in Britain to be a landlord, according to specialist mortgage lender, Kent Reliance for Intermediaries (see table below).
The research found that the average cost for landlords in the region (excluding mortgage costs and tax, but including void periods) was £2,475 per property per year.
- Running a property in the North West costs on average £2,475 per year before tax, making it the third cheapest region to be a landlord
- This is below the national average of £3,571
- Trafford based landlords face the highest bills, while Burnley has the lowest running costs
- Letting agent fees are the largest outlay, followed by property maintenance
This compares to the national average total of £3,571 per year, 32.9% of average rental income. These costs have risen by 5.6% in the last two years without factoring in increasing taxes.
London was identified as having the highest average costs for landlords, at £6,455 per property. However, the higher rents mean that this equates to less than a third (31.3%) of landlords’ rental income, the lowest cost to rent proportion in the country. The South East was the second most expensive region, with landlords spending an average of £3,656, or 34.2% of rental income, followed closely behind by the East of England with average costs of £3,300, or 34.6%.
In the North West, on average £555 is currently being spent on maintenance, repair and services, and £655 spent on letting agent fees per property. A typical landlord spends £298 per property each year in ground rents and service charges. Insurance typically costs £149, and legal and accountancy fees £107, with administrative and license fees add another £64 per year. Voids accounted for an average of £369 in the region.
Within the region, it was landlords in Trafford that spent the most on their properties with an average of £3,928 per year, followed by South Lakeland with £3,243. At the other end of the scale, Burnley was found to have the lowest running costs in the region to be a landlord, with an average spend of £1,552.
Through their spending across the country, landlords currently contribute £16.1bn to the British economy. However, 36% said they were considering cutting expenditure as a consequence of tax rises and higher running costs.
Adrian Moloney, Sales Director of OneSavings Bank, comments:
“The significant economic contributions landlords make both at a local and national level is often overlooked. They support thousands of jobs through their spending and house a nation that is increasingly reliant on renting. Instead, landlords have faced punitive tax and regulatory changes, at a time when running costs are climbing.
“Policies that increase the cost and complexity of being a landlord don’t benefit tenants; quite the opposite. Property investors will seek to protect their business’s margins, whether cutting their spending on elements like property maintenance and improvement, or raising rents. The recent reforms are also deterring new investment, especially from amateur landlords. This does little to tackle the housing market’s chronic undersupply of property.
“Further intervention could prove counterproductive with many landlords still coming to terms with change. A heavy-handed version of rent control that prevents them from absorbing rising costs, for instance, could prove to be a tipping point leading to a dwindling supply of rental homes. However, there is a real opportunity to align longer term tenancies to fixed-term mortgage products. This would not only provide stability within the sector but provide a platform for the private rental sector and the government to work together to create a more positive outcome in the social housing debate.”
Article supplied by OneSavings Bank Group
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