How much does it cost to buy an empty BTL property?

Harvey Lewis
14th February 2018
question 55

Government figures suggest 175,000 privately rented properties may have been empty for at least six months of the last year, laying bare the full cost of owning an empty buy-to-let property.

Estimates from deposit-free renting experts Dlighted indicate that landlords could be left at least £774 out of pocket for every month their property remains empty – nearly £10,000 a year.

The figures come as credit-rating giants Standards and Poors predict that half of buy to let investments will be loss-making by 2021.

Dlighted’s estimates break down as follows:

Mortgage: Figures from the Homeowners Alliance claim that if an investor owns a property with a buy-to-let mortgage on an averagely-priced property – with a standard 75-80% loan-to-value ratio – they will be re-paying around £510 a month.

This means that over a six month period property investors will have to pay £3060 to keep up with the mortgage.

Council tax: In November the Government announced a 100% council tax premium on empty properties. With the annual average council tax for a band D property currently £1591, that means extra costs for landlords of £133 ever month.

Vacant property insurance:  The majority of insurers companies state their policies are invalid if a property is vacant. MoneySuperMarket data suggests the average additional cost of insuring your home if it’s unoccupied is £131 per 30-60 days.

Utilities suppliers will also typically charge property owners will a service charge, even if no gas, electricity or water is being used in the property.

Ajay Jagota, Dlighted founder, had this to say: “Every landlord’s worst nightmare is an empty property. So many buy-to-let landlords only rent out properties to provide a modest pension or because it’s the best way of managing a family property, and the simply cannot afford to losing money month after month.

It sounds incredibly obvious but the easiest way to get your property let and keep it that way is to make it as easy as possible for tenants to move in. And asking them to pay an average deposit close to £1000 doesn’t do that. 85% of renters told us that deposit free renting was what attracted them to their landlord or letting agent and that tells you everything you need to know.

People think a deposit protects them, but it doesn’t. It puts off potential customers, and keeps properties empty – which makes it more likely that they will fall into disrepair or become magnets for antisocial behavior. Zero deposit renting using deposit replacement insurance on the other hand keeps you and your property safe.”

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