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Property investment costs rising as landlords tighten belts

May 26, 2017

advice on reducing property investment costs from Optimise Accountants

By Louise Misiewicz

Are you concerned about rising property investment costs?

Have you considered reducing your portfolio as a result?

I was reading an industry report on property investment costs this week, and some of the statistics were surprising. I thought it would be worth highlighting some of the details here for our property investors.

Despite the rising value of properties in the UK, many of our property investment clients have been discussing the rising costs of maintaining their property portfolios in 2017, as various pieces of legislation have impacted the profitability of their property businesses.

What do property investors contribute to the UK economy?

According to research by specialist mortgage lender Kent Reliance, landlords currently contribute £15.9bn per year to the British economy through pre-tax spending on running their portfolios.

This has more than doubled from an estimated £7.1bn in 2007, due to the significant growth of the private rented sector and increasing costs per property, according to the report.

The cost of property upkeep, maintenance, and servicing is the largest outlay (£5.5bn). Landlords spend £2bn in service charges and ground rent, £963m on insurance, £904m on utilities, and a further £1.1bn on other associated costs of letting a property. Spending on letting agents’ fees totals £4.7bn each year, with £644m spent on legal and accountancy fees, and £218m on administration costs.

Altogether, landlords provide £5.5bn of revenue for these commercial sectors in the UK.

You can read the full report from Kent Reliance, called The Finance of Investing, by visiting here and downloading it.

What are the costs to landlords, and how can they be cut?

According to the report from Kent Reliance, the average landlord now spends £3,632 per year in running costs per property, before tax or mortgage interest. This has jumped by a quarter since the start of 2007, an estimated rise of £714, without factoring in increasing taxes.

With rising costs and higher tax bills, buy-to-let landlords across the UK are taking action to cut costs.

It’s been estimated from conversations we’ve had with property investor clients so far in 2017 that one in five are looking to raise rents in an attempt to minimise the rising costs of their property investments.

Property upkeep and maintenance are the most popular area identified by landlord clients for potential cost cutting, followed by letting agent fees and mortgage costs. I will be monitoring this with my clients.

I would say that although cutting costs is an essential part of maintaining and managing any property portfolio, it’s also important to ensure that a professional service is still provided to all tenants.

I’ve written the following articles which will provide useful additional information on how to minimise costs and increase the profitability of a property investment portfolio:

Understanding Return On Investment (ROI)

How property income must be calculated

Using property losses to reduce tax liability

How to engage with us

If you want to understand how to implement the elements raised in this article or to discuss other finance/tax questions then please book some time with us using the below calendar.

Please use the redeem code “Article 33” to get 33% off your next consultation call.

If you are looking for a new accountant, then please book some time with us using the below calendar.

Please note that this booking is to describe our services and will not be used to discuss your personal tax affairs.



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Telephone: 0115 939 4606
Email: simon@optimiseaccountants.co.uk