Buy to let property costs

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Buy to let property costs

Buy to let property costs
When starting out a buy to let business, one of the major and the obvious cost is the property itself. In addition to the cost f the property, there are a range of other expenses included in the business. These additional costs can be the deciding factor in the financial viability of the investment.

Setting up a Buy to let mortgage is usually more expensive than the traditional residential mortgages. Whereas 100% mortgages are available for residential clients, most lenders issuing buy to let mortgages will only provide a mortgage for a maximum of 75% of the property price. There ate some lenders who will provide a 80% loan to value mortgage, but these deals are not normally available.


Using a mortgage broker can sometimes cost you a fee too. Some brokers charge a fee of around 0.5% for arranging the mortgage, although there are also many mortgage brokers that provide a mortgage completely since they rely on the lender commission only.

As well as lower loan to value, the interest rates for a buy to let mortgage are normally slightly higher than those on residential mortgages.

If you opt for a managed letting service through an estate agent, then you will need to budget for paying a letting agent. Most fees range between 10% and 12% of the rental income. There is also costs involved in having a tenancy agreement drawn up professionally will cost from £50 to £150.

There will also need to be consideration for buildings and contents insurance. The charge on a buy to let property is usually higher on that that of a residential property. Shop around to obtain a god quote.

A lot of tenants prefer to rent furnished properties, so you will need to allow a budget for furnishing the property. If you are letting to students then they will expect some basic furniture, but people relocating for business may not.

In addition to furniture, also allow a budget for any re-decoration work and ongoing maintenance and redecoration of the property. Knowing some DIY will always be useful.

From a legal front, you are required to hold a valid safety certificate for any gas appliances, which must be renewed annually.

Other costs will include the cists of advertising and marketing activities, fees for listings in directories, and membership subscriptions for professional associations.