Many new landlords fail to fully appreciate the costs involved in buying and maintaining a buy to let property. These costs can be considerable in terms of money the landlord has to assign to his let property. Listed below are some of the items that are landlord needs to be aware of and take into account. This is a generic list and by all means certainly not conclusive. Individual circumstances differ from one landlord to the next.

During the purchase stages of a buy to let property the landlord will incur certain costs on top of the actual price of the property. These costs can include items such as:

• Stamp Duty Land Tax (SDLT) – is a property tax that is applied to purchases of flats, houses and other land and buildings. The level of tax payable varies depending on the purchase price of the property. In some instances there is no SDLT to pay.
• Solicitor’s legal fee – The legal process of buying and selling a property is called conveyancing. Conveyancer is the generic term given to either a conveyancing solicitor or licenced conveyancer. All solicitors practising law in England and Wales must also be registered with the Law Society. Fee’s can vary considerably from practice to the next so do some research and budget for these costs.
• Lenders Fees – Almost all Mortgage providers will normally charge some form of an arrangement fee, a booking fee and a valuation fee. It is not normally possible to indicate typical costs for these items as they vary considerably between lenders and between mortgage products.
• Property Surveyor’s fees – can also vary considerably so potential landlords should discuss fee levels with two or three professionals and then negotiate a fee with the surveyor of their choice. This type of survey is suitable for all residential properties and provides a full picture of the property’s construction and condition.
• Land registration fees and searches – Land Registry fees are payable to register the property in your name. The Land Registry varies these fees from time to time but is usually static. Local Authority searches involves in a search of the records of the local authority relating to the property. The cost depends on the local authority concerned.

To fully prepare a property for use as let property the landlord has to prepare the property to ensure that the property is suitable as let property. A number of costs are associated in the preparation of the property for rental purposes.

• Complying with regulation – There are specific legal obligations and responsibilities on a landlord with regard to Fire safety for Furniture & Furnishings; Gas supply and appliances. In other cases such as electrical checks there are no clear regulations but the landlord does have a duty of care to ensure that all systems are safe.
• Decoration – To attract potential tenants, it is far easier if the property was in a good decorative order.
• Purchase of furniture – You may need to purchase some white goods prior to letting the property. Perhaps some carpets and curtains.
• Potential cleaning costs – When a buy to let property is purchased it often requires some form for cleaning and renovation to modernise it.
• Any utility bills before the property is let – The landlord is responsible for the utility bills such as gas, electricity and water until the property is let out.

To let a property the landlord must find suitable tenants. There are number of ways of finding suitable tenants and again most methods will incur some costs to the landlord.

• Self management – The landlord can use their own resources to find tenants for their buy to let property.
• Letting agent – will charge a management fee in finding tenants for the landlord but will also usually carry out the necessary checks on tenants. As part of a managed service there is a monthly fee payable to the letting agent.
• Press adverts or internet advertising either by the landlord or the letting agent.
• Time spent in showing potential tenants the property can be time consuming and may mean taking time off work.
• Tenant reference checks. Can be done by the letting agent or by the landlord by using a tenant referencing service.

On going running costs can amount to considerable sums of money and there may also be unforeseen expenditures that can arise. All these costs have to be factored by the landlord to make a profitable buy-to-let venture.

• There will be times when the property will be unoccupied. The mortgage repayments still need to be paid.
• There could be accountancy fee’s and bank charges if you run a business account.
• Repairs and renovation costs and furniture replacement costs.
• Landlords let property insurance. A property that is let must have a property owner’s policy. The premium will vary depending on the building sum insured, postcode area and the type of tenants are some points that are taken into account by an underwriter.
• Ongoing compliance and regulation costs such an periodic gas safety checks.

You may not be responsible for all these costs as some may be borne by the tenant depending on your agreement with the tenant.

Active Insurance is a UK leading specialist broker offering online buy to let property insurance for landlords with all types of properties. Quotations for house, flats, maisonettes with professional, students, DSS or even asylum seekers as tenants.