6 Money Saving Tips for Landlords

New landlords are often surprised at the costs they run into. Far from the dream of renting out a property and simply waiting for rent day to roll around, any given month could include a dozen reasons for landlords to dip into their pockets and pay out on some expense. 

Luckily, every cost is also a chance to save. We have helped let over 500,000 properties and have learned the best ways for landlords to make smart savings. 

1. Use Your Expensable Allowances

Many landlords are surprised by how many costs can be deducted from the tax they pay on their rental income. The list of tax-deductible costs that landlords can claim is large. It includes:

  • Repairs and property maintenance costs
  • Replacing supplied furnishings
  • Ground rent on a leasehold property
  • Buildings insurance

Making sure you claim all of this will mean moving hundreds, or even thousands of pounds of your rent out of your taxable income, potentially saving you hundreds. It could even push you down into a lower tax bracket. 

Remember that landlords can also use the Spare Room Allowance to pay no tax on rent from lodgers in their own home, up to £7,500 per year.  

2. Order Everything Online

Just like with groceries and clothes shopping, the best savings on landlord services can be found with online sellers. This is true for tenant referencing, safety certificates and landlord insurance.

If you buy these landlord services from a local letting agent or firm then you are very unlikely to find the cheapest deal available. But when it comes to gas checks or referencing, the service you receive will most likely be identical. There’s no point paying £70 instead of £20 for the same referencing report!

Online vendors have much higher volumes, which allows them to negotiate the best rates with referencing companies, insurers and even networks of tradespeople like gas engineers and electricians. 

It’s clear. For the lowest prices on landlord services, you should shop around online first.

Visit our one stop shop for landlord services.

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3. Landlord Association Membership Benefits 

Landlord associations offer many benefits to their members, including some handy savings. 

For example, if your property falls under the local council’s licensing scheme, then you will need to buy a license. Often, councils have discounts for landlord association members, as they think that these landlords will be more likely to follow the rules and learn about new regulations. 

A typical 20% discount on an £800 license fee is a £160 saving that will eclipse most landlord association subscriptions. 

4. Remortgage Often

If you bought your property with a buy-to-let mortgage, you might be surprised by how much you can save by remortgaging regularly. Introductory rates end and lenders are counting on you being too busy to bother shopping around. 

It’s very important to make time to check if you could be on a better deal, as you could save thousands. Here’s a remortgage comparison tool we recommend.

5. Don’t Get locked into Contracts with Ongoing Fees

If you use a letting agent, they will try to make you sign a contract that builds in plenty of costs down the line: fees for replacing tenants, fees if you want to stop using them to find your tenants, fees for evicting tenants, fees for renewing your tenancy with the same tenants… and all of this on top of the 10% they take every month! 

One of the single biggest savings landlords can make is to avoid using letting agents to let their properties and avoid all the hidden fees in their contracts. Using a ‘fully managed service’ offers very poor value for landlords indeed. 

6. Custodial vs Insured Deposit Schemes

An easy saving to kick off your tenancy with is your choice of deposit scheme. You have to register your deposit with a protection scheme, but there are two kinds — custodial and insured

Insured schemes allow you to keep hold of the deposit money for the duration of the tenancy. But there’s a catch. You have to pay a fee, usually around £30. Given interest rates are at an all time low, it is probably better to avoid the fee than have the cash in your own bank account. 

Start the discussion at community.openrent.co.uk

This article is not intended to form legal or investment advice. Investments in property are not guaranteed and can decrease in value as well as increase.

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