Being a landlord in the UK may sound like an ideal job, and you may think that once you’ve rented out a property, you can just put your feet up and watch as the money rolls in. But in reality, this is far from the truth.
Being a UK landlord involves a lot of hard work, and it can be very time-consuming and stressful, especially if you’re just starting out.
To help you make an informed decision on becoming a landlord in the UK, we’ve compiled a list of the pros and cons you need to be aware of:
Having an unstable income can be extremely stressful. You live day to day never knowing if you’ll be able to pay your bills next month. The major benefit of being a landlord is that you’re going to have a steady income.
Every month a landlord receives a good income from rental payments, and the amount will also always be enough to cover any outstanding mortgages on their properties.
Once a landlord has paid off the outstanding mortgages, they will receive an even greater income.
As a landlord, you are subject to some pretty heavy taxes (see cons). However, the UK government does try to help landlords out financially by providing tax deductions. The allowable expenses are those related to renting out your property, such as maintenance costs and agency fees.
Independence and flexibility
Although being a landlord in the UK does entail having many responsibilities, you do have a lot of independence and flexibility.
Being a landlord means you don’t have to answer to anyone else — you’re your own boss. You make the decisions and you get to set your own hours and goals.
While the property market fluctuates constantly and house prices rise and fall, landlords are always going to be making a stable income through rent.
Moreover, as a landlord, if something happens to your house and you need to relocate, you can stay at one of your own properties (obviously, this is only possible if there are no tenants at the property you wish to stay at).
There are many hidden costs when it comes to renting out a property. Besides the upfront costs when purchasing the property, you’re also going to have to cover lots of additional expenses such as maintenance costs and administrative costs.
Another problem that could arise is that tenants may be unhappy with the property’s existing furniture. If this is the case, you will not only have to buy new furniture to replace the old furniture, but you’ll also have to pay for removal costs. Considering the average removal costs start from £150, your costs can easily add up.
As a landlord, you are responsible for any household emergencies that occur at your properties. If a tenant loses their keys and can’t get into their house, (unless you’ve paid an external agency to handle emergencies like this) they’re going to be phoning you up no matter the time of day. This can be very time-consuming and stressful, and if emergency maintenance is required, you’ll be the one paying the repair costs.
Landlords in the UK must pay tax on any profit they make from renting out a property. The exact amount of tax a landlord must pay depends on many factors and can change regularly.
As well as this, landlords are subject to greater stamp duty rates compared to regular homeowners.
Tax can be very complex to sort out if you’re a landlord, and it requires a lot of time-consuming administrative work.
If you’re a landlord, you may have to deal with problematic tenants, which can take up a great deal of your time and cost you a lot of money.
You must have an in-depth understanding of property law and legislation impacting landlords, otherwise, you won’t know how to properly handle problems such as late rent payments.
It’s clear that being a landlord is not as easy as it seems, and it involves a lot of hard work and commitment. However, for those who are fully prepared, becoming a landlord can be highly rewarding and a profitable venture.
Ultimately, the decision is up to you: do the pros outweigh the cons?