First Time Landlord: Costs
Inheriting a property, relocating for work, or moving to a larger or smaller property are just some of the reasons that someone could find themselves in the position of owning a property that they don’t live in. A decision then has to be made what to do with the property; sell, leave it empty, or find a tenant. For many, who do not want to sell their property, finding tenants is the best – and most financially viable – option.
We have put together a list common set up costs for new landlords to help when making the decision to rent a property. All costs included are those charged by Clan Gordon and our trusted contractors, costs may vary.
The first step for anyone considering becoming a landlord is to arrange a property valuation with a reputable, local letting agent. An agent will have a good understanding of the local market and will be able to accurately value your property by checking the condition and referring to comparable properties that have recently let in the area. Having an accurate rental valuation provides a good initial indication of the financial viability of renting the property.
Some agents may inflate the rental valuation to win business, so it could be worth meeting more than one and also doing your own research. Remember, the best tenants are not always those who are willing to pay the highest price; pricing your property accurately within the market will give you a larger pool of potential tenants to choose from.
Arranging a professional rental valuation is beneficial even for those who are planning to self-manage their property. In addition to guidance on expected monthly rental income, a letting agent will also provide information on safety certificates required and give suggestions for improvements to help maximise your rental income.
Appoint a Letting Agent or Self-Manage?
The decision whether or not to appoint a letting agent is one that usually comes down to the time and level of experience and market knowledge that the landlord has available.
Cost: % of monthly rent
Employing a letting agent to manage the property means that, for a monthly fee, the entire management of the property is handled by the agent, with as little (or as much) involvement from the landlord as they are comfortable with. A fully managed service is the most popular choice for our Edinburgh landlords, find out more about what is included in property management here.
A letting agent should always be upfront with you regarding additional costs included in marketing the property, but it is best to ask just to be sure. Additional costs may include advertising, photographs and a floor plan. At Clan Gordon, we charge a £175 +VAT marketing fee, this includes advertising (on all of the main property portals), photographs and a ‘to let’ board.
Most letting agents will also have the option of a let only service. This is when the agent does everything up to the point that the tenant moves into the property, then the landlord takes over the management. Some landlords choose this option if they are confident managing the property themselves, and have the time to do so, but want an agent to help with marketing, viewings and ensuring that tenancy and safety legislation is met.
Contact us to find out more about our let only service.
Legislation surrounding private residential lettings stipulates that the following safety certificates and checks are completed before tenants can move in to a property. Having all of the certificates and checks carried out can be one of the most significant costs for first time landlords.
All costs are those currently charged by the contractors used by Clan Gordon.
Energy Performance Certificate (EPC)
Cost: £47.50 +VAT
A valid EPC is required before a property can be marketed for rent. An EPC is valid for 10 years, you can search the Scottish EPC Register (www.scottishepcregister.org.uk) to check if your property has one already.
Gas Safety Certificate (GSC)
Cost: First appliance £26.50 +VAT. Second appliance £12.50 +VAT
The GSC checks the condition of all gas appliances in the property. This certificate must be renewed annually by a Gas Safe registered engineer.
Carbon Monoxide (CO) Detector
Cost: £31.45 +VAT
A CO detector must be fitted in all properties containing a combustion device, which runs on gas oil or solid fuel, with the exception of those use solely for cooking.
Portable Appliance Test (PAT)
Cost: £2.50 +VAT per appliance
The PAT checks the safety of portable appliances including integrated white goods. Appliances must be tested annually.
Legionella Risk Assessment (LRA)
Cost: £47.50 +VAT for initial assessment. Annual check £17.50 +VAT
The LRA assesses the risk to tenants of exposure to Legionella bacteria in the property.
Electrical Installation Condition Report (EICR)
Cost: £95 - £110 +VAT for 1 or 2 bedroom property
The EICR checks the condition of all electrical installations in the property. An EICR must be carried out a minimum of every 5 years by a qualified electrician.
Smoke and Heat Detectors
Cost: £95 +VAT per detector. £45 +VAT per replacement
The number of detectors required varies depending on the layout of the property, most will require a smoke detector in the hallway and living room, and a heat detector in the kitchen. Smoke and heat detectors must be mains powered and interlinked.
Cost: From £60 +VAT (variable depending upon number of bedrooms)
At Clan Gordon we use a third-party company to compile a photographic inventory at the beginning of each tenancy. We use an external company to ensure that our inventories are impartial, increasing the chances of our clients securing funds requested from a deposit in the rare event of a dispute at the end of the tenancy.
We have all of our properties professionally cleaned before tenants move in. This is something that not all letting agents do, but we insist that our properties are all cleaned to the same high standard.
The cost of a professional cleaning company, who will clean to a commercial standard, is approximately £16 - £20 +VAT per hour. A non-commercial clean, even by the best domestic cleaner, will simply not achieve the same level of clean. For landlords looking to minimise costs, we advise cleaning the property yourself, then arranging a sparkle clean from a professional company.
Tenants are obliged to return the property in same condition as it was when they moved in, so properties that have been commercially cleaned must have the same done at the end of the tenancy. This means that landlords should only pay for one clean, the ongoing cost is covered by the tenants.
Depending upon the condition of the property, landlords may have further costs to get the property to a high enough spec to rent. These costs may include:
- Redecoration – walls, flooring and woodwork
- Furniture – read more about furnishing a rental property here
- Upgrading kitchen and bathrooms
- Any maintenance work
Tenants are tending to rent for longer, and so, look for high quality properties where they can settle long term. This, coupled with the removal of a minimum term for tenancies following the introduction of the PRT, means that it is important for landlords to ensure that their property is not just fit for purpose, but provides a comfortable home for tenants.
Contact us to arrange a valuation for your Edinburgh rental property, including a personalised plan to get your property ready for rent and tips to maximise your rental income.