A new piece of research conducted by specialist mortgage lender Kent Reliance has indicated which regions of the UK are most expensive to be a buy-to-let landlord.
Unsurprisingly, London came out on top as the most expensive place in which to be an investor. The average cost to run a buy-to-let property in the capital is £6,535 per year – 32% of the amount they actually receive in rent.
The average UK landlord spends £3,632 per year- amounting to 34% of average rental income and almost half the cost of those in the capital.
With London seeing the highest running costs, spiralling rents here means that this total is less than a third of their overall rental income.
The second highest running costs are found in the South East, where landlords spend an average of £3,691, or 37% of rental income. This was followed closely by the East of England, where typical costs are £3,212, or 35%.
On the other hand, the North East of England was revealed as the cheapest region, where average costs amount to £1,895 per property per annum. This corresponds to 34% of the amount they receive in rent.
Second lowest was Wales, where landlords spend an average of £2,211. Despite this, the area has lower rents, so costs can run up to as much as 41% of a Welsh landlords’ rental income.
Third lowest was the North West, where landlords spend £2,483, or 33%, of overall rental income.
Now, landlords are facing more tax burdens, due to stamp duty changes brought into force last year, alongside mortgage interest tax relief changes, which are being phased out during the next four years.
As a result, many landlords will be looking to slash costs, probably on property maintenance and mortgage costs. One in five said they were considering raising their rents in order to claim back some of these increased costs from their tenants.
John Eastgate, Sales and Marketing Director of OneSavings Bank, noted: ‘With a fifth of UK households living in rented accommodation, landlords play a crucial role in supporting the housing market as they bridge the gap between housing supply and demand.’
‘While taxes may seem to be a simple way to tackle the UK’s housing crisis, they will have a ripple effect, and will impact businesses who support the property industry as landlords apply cost cutting measures, or cause rents to rise as tenants cover the cost of rising taxes, or even both,’ he continued.
Concluding, Mr Eastgate said: ‘Another effect that will emerge is a rise in professionalisation of the sector as amateur and accidental landlords leave the market, leaving fewer, bigger landlords. But this alone will not solve the nation’s housing crisis.’