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The costs involved in letting a property

There are a number of costs to a landlord when letting a property:

Letting agent fees

Letting agents provide a variety of services that can make life easier for landlords. The degree of service a letting agent provides will command a different price, which is usually a percentage of the rent based on the percentage of the term.

Letting agents can help market the property, vet any prospective tenants, collect rent (and chase it if it is not paid on time) and can also fully manage the property, including dealing with any emergency repairs.

Income tax and capital gains tax

Income tax needs to be paid on the rental income and if the price of a property has increased when it comes to selling, the profit may be subject to capital gains tax.


Landlords are obliged to keep the property in a serviceable state, and this comes at an expense. Many of these costs are tax deductible, however, including the following:

  • Repainting
  • Replacing damaged furniture
  • Replacing water pipes and disposal duct
  • Cleaning and gardening

Landlord insurance

Landlord insurance comes in three different tiers. There is buildings insurance, which covers the structure and protects against fire and flood damage. Then there is contents insurance, which is relevant to landlords renting out a property (tenants should have their own personal insurance too). Finally there is landlord liability insurance that covers landlords in the event of a tenant or visitor being injured in the property and the landlord is judged to be responsible. As well as these policies landlords can set up rent guarantee insurance to cover them against unpaid rent. Some policies also offer cover against potential legal expenses and home emergency cover to ensure core utilities, including gas and water, are quickly restored after an outrage.

Safety certificates and EPCs

Landlords are required to produce any necessary gas safety records to show that the properties meet the legal requirements. You are also required to ensure that the electrics in the property and the appliances are safe.

Energy Performance Certificates (EPCs) also need to be kept up-to-date. Each EPC is valid for ten years, and they cost an average of between £60 and £120.

Unpaid rent and voids

The risk of unpaid rent, or no rent coming in due to the property being empty between tenants, can be mitigated by only expecting to receive around 90% of the total potential rent throughout the course of a year. Many landlords will budget for this contingency, and rental protection policies are also available to ensure there is an income during periods of vacancy.

Contingency funds

Putting aside a little of each month’s rent means funds are available to cover any unforeseen expenses. It can also help make mortgage repayments during periods when no rent is being paid.

For more information talk to a KFH letting agent.

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