Soon to be first time landlord: what expenses are involved in renting a property out

Hi, my partner and I are about to become first time landlords. We have been calculating what profit we’ll be left with after interest and expenses are deducted. I’m just wondering if there is something I might be missing to include in the numbers. Could the more experienced of you please advise what expenses do landlords normally have. So far as outgoings I have:

Mortgage interest
Agents fees (depending on type of service)
Gas safety certificate (every year)
EICR (every 5 years)
EPC (every 10 years)
Landlords insurance
20%tax on rental income after allowable expenses (both basic rate taxpayers).
Maintenance fund (what % roughly would you say should we budget for maintenance and repairs? I say 10% my partner thinks that’s too much if the property is in good condition).

Is there anything else I should add to the list?
Thank you for helping a newbie.

You can claim a tax deduction for mileage related to the letting business (trips to the property, to the agent etc) at 45p per mile.

Mortgage interest and other finance costs (arrangement fees etc) are not actually tax deductible though. You get a tax credit at 20%.

Works out the same if you are basic rate tax payers, but I can push you into 40%… extreme example: say you earn £50,270 (the basic rate upper threshold) from employment, and have £10k rental profit before interest and £10k interest. If the mortgage interest was tax deductible, you would have no tax to pay. But it isn’t, you pay tax on the £10k profit (at 40% in this example, so £4k) and then get a tax credit of 20% on the interest (£2k) and so end up with tax to pay of £2k.

Not to mention your income for child benefit (and student finance) purposes is the £10k profit before interest. So, you lose all of you child benefit too.

  • Furniture renewal fund
  • tenant advertising and referencing
  • utilities and CT between tenants
  • licensing fee if your Council introduces it
  • ICO fee
  • professional association fee (eg NRLA)

There are others, but like these, they’re quite small most of the time.

You should also allow for voids or unpaid rent, but that’s hard to estimate.