Some buy-to-let (BTL) landlords are spending 28% of their rental income on maintaining the property according to new research from Howsy.
Newly released figures from the lettings management platform have shown that BTL landlords are spending an average of £2,213 per year on maintaining each of their properties.
They recommend the 1% rule, i.e. budgeting to spend 1% of the value of the property per year on essential maintenance, but admit that the cost varies across the country.
Howsy then looked at the current average rent across the market and what proportion of rent is required to cover these maintenance costs and how it differs regionally.
Wales sees some of the highest percentage of rental income spent on maintaining rented property with 1% of the average property price being £1,639, and the average annual rent being £6,182, meaning that 27% is spent on maintenance.
The East of England takes the top spot, with 28% of average rental income spent on upkeep. Whilst at the opposite end of the scale is The North east, with 20%.
Surprisingly, London is home to the fourth lowest maintenance costs, with 1% of property value accounting for just 23% of the average annual rent.
However, landlords looking for the lowest maintenance costs should look to Glasgow, where just 13% of average rental income is required to cover the upkeep of properties.
Inverclyde (14%), West Dunbartonshire (14%), Midlothian (14%), Burnley (15%), East Ayrshire (15%), Belfast (15%), Falkirk (15%), Dundee (16%) and Clackmannanshire (16%) were also amongst the lowest buy-to-let locations for maintenance costs.
In London, Tower Hamlets (20%), Barking and Dagenham (21%), Newham (21%), Greenwich (23%) and Hounslows (23%( were the boroughs home to the lowest buy-to-let maintenance costs as a proportion of the average annual rent.
Calum Brannan, founder and CEO of Howsy, commented:
“Covering maintenance costs is an essential part of managing your buy-to-let investment as failing to do so will not only reduce the profitability of your investment as tenants look elsewhere, but it can also land you in hot water legally if your property is not fit for purpose.
“Using the one per cent threshold of the purchase price of your property is a sensible place to start when budgeting for maintenance and although it acts as a rough rule of thumb, it should cover everything but the very worst damage to your property.
“Of course, the government’s consistent attack on the profitability of the buy-to-let sector could have alternative consequences as landlords cut corners on maintenance to get by, but as our research shows, this doesn’t have to be the case.
“The UK rental sector is a vast and varied one and investing in the right property, in the right place, will see operating costs remain palatable and profits remain robust.
“However, with technology changing the face of the industry, landlords now have even more options at their disposal when it comes to keeping their investment profitable and all of their costs under one roof.
“That’s the exact reason we launched Howsy Protect, as it not only guarantees rent if your tenant falls behind, but it protects against unforeseen repair costs. So rather than keep a chunk of rental income back for a worst-case scenario, landlords can pay one consistent, manageable monthly cost and rest safe in the knowledge we’ve got them covered.”