Landlords 'failing to consider range of costs'
Published by Daniel Jones
A number of landlords in the UK are getting into the business without being aware of exactly what is expected of them and how many costs they will face in order to meet their obligations to tenants.
New statistics released in YouGov's Landlords and Mortgages 2013 report show the view of lenders that the buy-to-let
market has improved since the financial downturn is wrong. Instead, it suggests that many people are becoming landlords under the illusion that they will be able to make a short-term gain, but this is often not the case.
The returns enjoyed by landlords are said to be in a period of decline, even though rents are on the rise. Landlords can expect a return of between one and four per cent, whereas this range was between four and six per cent in the period from 2002 to 2006, reports the Daily Telegraph.
Many property owners are also suffering financially because they got into the market without knowing exactly what costs they would face.
"While 93 per cent consider mortgage interest payments, only 68 per cent take account of agency fees and 46 per cent budget for other management expenses," the report stated.
With this in mind, it is clear that landlords need to gain a greater understanding of the rental market and exactly what they will be asked to pay for in their role. Only after making sure the sums work out should they invest in a property with a view to letting it out.
The good news for the market is that growth is still on the cards, with the number of landlords said to be rising all the time. Indeed, there are now 1.5 million landlord mortgages in place in the UK, making up some 13 per cent of all property lending.
If healthy returns are to be made, it might be crucial that landlords do all they can to maximise their knowledge of the sector and the costs they will be liable to pay.
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Published on: July 9, 2013
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