Becoming a landlord is extremely appealing to a lot of people – and there’s no question as to why. Property is one of the safest investments that you can make, and if you’re investing in a rental, then you’re likely to make a profit on whatever you’ve spent in the long term. Likewise, it’s also a great way of earning a second income and working for yourself – but what are the negatives to becoming a UK landlord? Obviously with all of these positives comes responsibility and expenditure, and that’s something that a lot of people forget to mention. If you’re considering becoming a landlord in the UK, then here are some of the pros and cons of doing the job right.
It makes sense to start with the positives, so here are some of the pros of becoming a landlord in the UK:
A Steady Income. Having a steady income is what all of us want in life, whether you’re working in the property sector for a company such as ReadySteadySell.co.uk, or you’re in a completely different field. Being a landlord can provide you with just that – and if you keep your other job too, it provides a secondary steady income. The good news for landlords, is that if their property is rented out for the right price, their income is likely to cover any outstanding mortgage repayments they might have on the property – so the bigger your portfolio, the bigger your income. This income of course depends on your tenants, but if you choose reliable tenants who pay their rent on time, it shouldn’t be an issue.
Allowable Expenses. Now, with being a landlord, comes some fairly heavy taxes – it’s sad, but true. However, fortunately the government also offers some relief with expenses, which can take some of the pressure off you financially. The expenses are for the purpose of renting out your property, so tend to include things such as maintenance, bills and utilities etc. However, remember as of April 2017, that landlords can no longer receive expenses on their mortgage interest payments.
Being Independent. One of the best things about being a landlord, is without a doubt working for yourself. Of course, responsibilities come with being your own boss – but the freedom that comes with it far outweighs the burden of responsibility. The great thing about it too, is that if you’re already in a professional career and want to boost your income, you can have the best of both worlds! After all, don’t all of us want a larger income?
Security. The property market is fluid, which means that it fluctuates all of the time. Prices rise, and prices drop. However despite this, property is without a doubt the safest financial investment, and landlords make an income on rent regardless of the buying and selling figures. Think about it, people always need somewhere to live, regardless of what the economy is doing, so there will always be people looking to rent, and if you make sure your property is desirable, you’ll never be without tenants.
Of course, as with anything there are a few, let us call them “responsibilities” that need to be considered:
Emergencies. The thing about being a landlord, is that you are solely responsible for any household emergencies that might take place. These could be anything from a completely broken appliance, to a plumbing issue – but if you can’t fix it yourself, then it’s within your realm of responsibility to pay to have the repair fixed.
Taxes. In the UK, there are always going to be mandatory taxes on any income that you make as a landlord. Depending on how much you make in your endeavour as a landlord, you might also be subject to make a tax return at the end of the year. Likewise, landlords are likely to be liable to pay more stamp duty than the average homeowner. There’s a lot of administrative work involved in being a landlord, and if you don’t want to do it yourself, then you’re going to have to pay a professional to sort out your finances for you.
Additional Costs.Of course, when buying a property you need to think about upfront costs. This could be the deposit for the property itself, and any maintenance and décor that might need doing – especially if you advertise the flat as furnished.
Being a landlord is a responsibility, but done well, can be an extremely rewarding one. So make your decision realistically – do the benefits outweigh the losses for you?