London has highest landlord costs in UK but this is offset by higher rent
London has been identified as the most expensive part of Britain to be a landlord, followed by the South East while the North East of England is the cheapest, new research shows.
The average cost for a landlord in London, excluding any mortgage and tax and including void periods, is £6,535 a year, or 32% of rental income, according to the research from specialist lender Kent Reliance.
This compares to the average cost nationwide of £3,632 per year for landlords but this is still a chunk of income, amounting to 34% of rent coming in as landlords get higher rents in London which is offsetting some of the higher costs.
In the South East landlords spend an average of £3,691 or 37% of rental income while in the East of England it is £3,212, or 35%.
The North East of England the average cost for a landlord is £1,895 per property per year but as rents are lower this still amounts to 34% of the amount that they receive in rent, more than the percentage in London.
The region with the second lowest average costs is Wales, with landlords spending an average £2,211 bur low rents means this equates to as much as 41% of a Welsh landlord’s rental income. The third cheapest region is the North West, where landlords spend £2,483, or 33% of rental income.
When looking at local authorities, landlords have the lowest running costs in Blaenau Gwent, Wales, where they average at £1,495, while the 19 local authorities with the highest average costs are in London. Outside of London, South Bucks in the South East tops the list, with landlords spending an average £6,078 per property.
The report suggests that as landlords are faced with rising tax burdens following stamp duty changes introduced last year and mortgage tax relief changes which came into effect in April, many could be looking to cut costs, targeting letting agent fees, property maintenance and mortgage costs. However, one in five are considering raising rents to recoup some of these costs from their tenants.
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, according to John Eastgate, sales and marketing director at OneSavings Bank.
‘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,’ he said.
‘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,’ he added.