Wrong. A buy-to-let investment requires constant upkeep to not only keep your tenant happy but to ensure your investment remains in line with the legal standards required.
Newly released figures from lettings management platform, Howsy, has found the cost of maintaining the average buy-to-let investment across the UK currently sits at £2,313, accounting for 28% of the annual rental income available.
Like it or not, this maintenance is a vital part of owning a buy-to-let property and Howsy has highlighted the annual upkeep cost based on the 1% rule, whereby budgeting 1% of the purchase price of a property covers the upkeep on an annual basis. Howsy then looked at the current average rent across the market and what proportion of rent is required to cover these maintenance costs and how it differs regionally.
Of course, different property costs and rents achieved across the UK means that this cost varies regionally and doesn’t have to hit the 28% seen at a top-level across the UK.
Nationally and Regionally
Wales is home to the highest proportion of rental income spent maintaining a buy-to-let with 1% of the average property price (£1,639) accounting for 27% of the average annual rent (£6,182), while Scotland is home to the lowest top-line level of maintenance costs at 17%.
On a regional basis, the East of England is home to the most expensive buy-to-let investment where upkeep is concerned, with this cost accounting for 28% of the average annual rental income. The North East is the most affordable at 20% and perhaps surprisingly, London is the home to the fourth-lowest buy-to-let maintenance costs, accounting for 23% of the annual average rent of £20,364.
Locally
The best investment location to keep maintenance costs low is currently Glasgow, requiring just 13% of the average annual rental income (£10,596) to budget for any unforeseen costs.
Inverclyde (14%), West Dunbartonshire (14%), Midlothian (14%), Burnley (15%), East Ayrshire (15%), Belfast (15%), Falkirk (15%), Dundee (16%) and Clackmannanshire (16%) were also amongst the lowest buy-to-let locations for maintenance costs.
In London, Tower Hamlets (20%), Barking and Dagenham (21%), Newham (21%), Greenwich (23%) and Hounslows (23%( were the boroughs home to the lowest buy-to-let maintenance costs as a proportion of the average annual rent.
Calum Brannan, founder and CEO of Howsy, commented: “Covering maintenance costs is an essential part of managing your buy-to-let investment as failing to do so will not only reduce the profitability of your investment as tenants look elsewhere, but it can also land you in hot water legally if your property is not fit for purpose.
"Using the one per cent threshold of the purchase price of your property is a sensible place to start when budgeting for maintenance and although it acts as a rough rule of thumb, it should cover everything but the very worst damage to your property.
"Of course, the government’s consistent attack on the profitability of the buy-to-let sector could have alternative consequences as landlords cut corners on maintenance to get by, but as our research shows, this doesn’t have to be the case.
"The UK rental sector is a vast and varied one and investing in the right property, in the right place, will see operating costs remain palatable and profits remain robust.
"However, with technology changing the face of the industry, landlords now have even more options at their disposal when it comes to keeping their investment profitable and all of their costs under one roof.
"That’s the exact reason we launched Howsy Protect, as it not only guarantees rent if your tenant falls behind, but it protects against unforeseen repair costs. So rather than keep a chunk of rental income back for a worst-case scenario, landlords can pay one consistent, manageable monthly cost and rest safe in the knowledge we’ve got them covered.”
