The Hidden Costs of Buy to Let Property Investment

28 Dec 2019

Buy to Let Investment is a brilliant way to generate a passive income and make your money work hard for you. So 2020 might be a great year to get started building a portfolio that will provide you with a solid income for years to come. If you are new to it, it’s a bit scary and let’s face it, you need cash to do it. So anyone that says “No Cash down” is talking rubbish!

Buy to Let Property Investment

I thought it would be useful to any new landlords out there, to create a list of the hidden costs of buying rental property in Scotland.

  • You need a Scottish based solicitor to handle the purchase and legals (around £1,000 per purchase)
  • All purchases (if you own a second property anywhere in the world – there a couple of exceptions) are subject to Additional Dwellings Tax ( ADT) at 4% of the purchase price (payable upon purchase)
  • Purchases over £145,000 will be subject to stamp duty in addition to the ADT
  • Mortgage arrangement fees (if getting lending)
  • Cost of getting the property rental ready (even if the property is perfect in terms of presentation, I always recommend you allow £500 for necessary safety certs etc)
  • Cost of insurance- landlords buildings insurance minimum – (depends on the value of the property but allow £250pa min)
  • Cost of key cutting and cleaning – allow £150 minimum unless you can do yourself!
  • Cost of any upgrades – painting, carpets, furnishings, blinds – rental properties need to look good when they come to the market
  • Cost of factor float – the factor (company dealing with communal areas) often requires a float from a new owner of £100
  • Cost of sourcing agent – if any
  • Cost of ongoing management – if any – in our case, our management service is 10% plus VAT plus marketing fee £199 plus VAT and check out fee £95 plus VAT
  • IMPORTANT – you will need to pay tax on your income generated so make sure you allow for this!

Happy Customers