Rising costs are hitting traditional buy-to-let investors from all directions, with new research finding that landlords are now spending more than a fifth of their total rental income on maintenance costs – a figure that is up 4.7% since the beginning of 2022 and likely to be especially worrying for private landlords given the government’s proposed legislation to raise standards in the private rented sector.
Property maintenance company, Help Me Fix, found that the annual average cost of maintaining a property has reached £2,864 per annum, with costs of over £5,000 in some areas such as London. Although maintenance costs have risen for landlords across the country, expenditure has increased most in the East Midlands, climbing by 6% since the start of the year.
Based on an average UK rent of £13,524, researchers calculated that maintenance costs now account for a whopping 21.2% of rental income – a significant figure that comes on top of the soaring cost of buy-to-let mortgages, increased taxation and increased legislation over recent years.
While these maintenance costs will be of concern to private landlords, there are alternatives to consider. For example, there are many ‘hands off’ investment models available that eliminate such worries, with ongoing repairs and maintenance included within the contract. Given the rising cost of maintaining a property, such solutions are becoming increasingly popular with landlords.
Renters’ Reform Bill: Could Costs Rise Even More?
Many landlords may be especially concerned by the threat of rising maintenance costs given the proposed reforms unveiled in the government’s Fairer Private Rented Sector White Paper, which aims to raise living standards and security for private tenants while cracking down on unscrupulous landlords.
Amongst numerous other reforms, a key proposal unveiled is the application of the Decent Homes Standard to the private rented sector for the very first time – something which currently only applies to social housing.
A cornerstone of the government’s desire to halve the number of ‘non decent’ rented homes across all sectors by 2030, the new standard will require that all homes must be free from serious health and safety hazards and be brought up to what it calls a ‘decent’ standard, including being warm and dry – and having decent noise insulation. Kitchens and bathrooms will need to be adequate, located correctly and “not too old” – and facilities within all properties will need to be updated when they reach the end of their lives.
While we would argue that all responsible and ethical landlords should be ensuring decent standards anyway, increased legislation is likely to come as yet another worry for private landlords.
What About Passive Property Investments?
With many landlords concerned over rising costs, which are currently having a significant impact on the profitability of traditional buy-to-let investments, is now the time to consider alternative, ‘hands-off’ investment models?
Options such as property portfolios are finding favour with many who have grown tired of the increased hassles associated with being a private landlord. Our Avora Capital investment, for example, offers a way to achieve regular rental returns without many of the aforementioned hassles and increased cost associated with managing a property on a day-to-day basis. Maintenance is taken care of within the contract, so there’s typically no need to worry about paying out for unexpected repairs and ongoing maintenance.
Of course, there are benefits and drawbacks to every type of investment – but turnkey solutions are becoming increasingly popular with many. For more information, please give us a call or complete our contact form to request a callback. We’ll be happy to talk you through the different options that may be available to you.
Important note: The information provided in this article is general in nature and does not constitute personal financial advice. If you are unsure whether an investment is right for you, please seek professional advice. If you choose to invest, the value of your investment can both rise and fall so you may get back less than you put in.