HOW UNEXPECTED COSTS CAN ADD UP
Buying to let is often a shrewd investment that could end up working as a pension fund for you. But be warned: you will have to spend money to make money, as the saying goes. While you already know about mortgage repayments and agent fees, there are lots of extra charges that prospective investors might not be aware of.
For example, you need to consider building insurance and even landlord insurance to cover any rent arrears or damage to the property. If you are worried about furniture and fittings, you might also want to purchase extra home contents insurance.
You will also need to provide a gas safety certificate, BER certificate, property tax, management fees, pay for annual health and fire safety checks. In addition to these initial costs, you will be expected to maintain the property to standard as per current legislation.
For example, if the boiler or washing machine breaks down, you will be responsible for fixing or replacing it as well as various other maintenance issues. Meanwhile, landlords are responsible for paying the annual service charges in apartment blocks. You also need to have a contingency fund in case of emergencies i.e. a leak that floods part of the property.
Costs like these add up. Failing to factor them in could derail your carefully planned thought out budget.