Income
Buy to let investing can come from two potential income streams: from rent and from capital growth of the property value going up.
The property market has ups and downs so it is possible to lose money if property value goes down, your outgoings exceed rental yield, or if the property is vacant for a period of time. So being a landlord is a medium to long term investment risk.
Expenses
Fees associated with property purchase:
- Stamp duty
- Valuation
- Property survey
- Legal costs
- Mortgage arrangement fees (If you already have a property with a standard mortgage you will need to seek your Lender’s permission to rent it out)
- Income tax is payable on your rental income, minus day to day running costs. There are specific rules for overseas landlords
- If renting your property counts as running a business then you will need to pay Class 2 National Insurance
Day to day costs
It is important to factor in the day to day running costs of a property into your calculations for rental yield.
Here is a list of some of the main costs:
- Letting agent’s fees
- Mortgage interest
- Redecorating
- Landlord's insurance
- Annual safety checks (on the boiler, etc.)
- Rent insurance (designed to protect you against having tenants in arrears or failing to vacate your property)**
- General building maintenance
**Terms and conditions apply. This information is a summary only. You will receive a full policy document upon application. This policy will set out the terms, conditions and limitations of this product.