London has been named as the most expensive region in the UK for landlords with average running costs totalling £6,535 each year before tax, almost double the national average of £3,632, according to research from mortgage lender Kent Reliance
London landlords face average costs (excluding mortgage costs and tax, but including void periods) of £6,535 per property per year, or 32% in rental income.
The average cost for a landlord id £3632 each year which equates to 34% of incoming rent, due to average rents being lower than London rent prices.
The second highest running costs are in the South East where landlords spend an average of £3,691 or 37% of rental income, followed by the East with costs of £3,212, or 35%.
The North East is the cheapest region where the average cost is £1,895 per property per year, or 34% of the amount that they receive in rent. The region with the second lowest average costs is Wales, with landlords spending an average £2,211. However, in an area with lower rents, costs equate to as much as 41% of a Welsh landlord’s rental income.
As well as higher costs, landlords face rising tax burdens following stamp duty changes introduced last year and mortgage tax relief changes which were introduced in April. Therefore landlords are currently looking for ways to cut costs focusing on letting agent fees, property maintenance and mortgage costs, with one in five landlords willing to raise rents.
John Eastgate, sales and marketing director of OneSavings Bank (owner of Kent Reliance),said: ‘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.
‘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.’
House prices in June have fallen for the first time since 2009, according to rightmove.co.uk, dropping by 0.4% (-£1,172). However sales are the second highest for ten years, only slightly lower than the high of May 2014.
