Buy To Let Finance Costs

The reason why many lenders insist that rental income should be 135 percent of the cost of the interest payments is that a property landlord has a number of ongoing expenses to cover. These include:

letting agent’s fees;

  • repairs, maintenance and redecoration;
  • legal insurance – to cover the costs of evicting tenants who fail to pay their rent;
  • renewal and replacement of furnishings – for properties let furnished;
  • building insurance (and contents insurance for properties let furnished);
  • allowance for periods between tenants without rental income.

Buy To Let Property – Tenant Issues
Purchasing a buy to let property is usually the easy part of the business. Sourcing and retaining tenants who pay their rent regularly and do not damage the property is what will really transform a buy to let property into a business success.

Letting Agents
Most letting agents charge around 10 percent of a property’s monthly rent to locate and vet tenants and at least 15 percent to provide a full property management service. A common gripe among buy to let property owners is that letting agents are more than happy to take their monthly fees when things are running smoothly but are often uncooperative and ineffectual if any action is required from them when relations with tenants deteriorate.

If you need a letting agent, good reasons exist for selecting an agent who is a member of the Association of Residential Letting Agents (ARLA). ARLA members have to contribute towards a bonding scheme which covers disputes over tenants’ deposits, which can often be contentious at the end of a tenancy. In addition, ARLA offers guidance to landlords and tenants on a variety of issues, including buy to let property, via their website ( and in printed guides.

Buy To Let Property – Future Prospects
Buy to let property is more time consuming for the investor than most other forms of investment and not without risk. However, so long as demand for accommodation from tenants is maintained and property prices continue to rise, future prospects for the sector continue to look encouraging.


  • Many lenders insist that monthly rental income from buy to let properties should be at least 135 percent of mortgage repayments;
  • letting agents charge around 10 percent of a property’s monthly rent to find and vet tenants;
  • ARLA offers guidance to landlords and tenants about issues including buy to let property.
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