Becoming a landlord can be a rewarding way to generate regular income and build long-term wealth through property. Alongside the rental returns, property values typically rise over time, creating strong potential for capital growth.
However, letting a property is not simply about collecting rent — there are many costs to consider. Being fully aware of these ensures you invest wisely, avoid surprises, and protect your profits.
Upfront Costs of Buying a Rental Property
If you’re purchasing a buy-to-let rather than using a property you already own, the initial outlay can be significant:
- Deposit – Buy-to-let mortgages usually can 25%–40%.
- Stamp Duty Land Tax (SDLT) – In addition to standard SDLT, a 5% surcharge now applies to second homes and buy-to-lets (from April 2025).
- Legal & Survey Fees – Conveyancing typically costs £1,000–£2,500, with surveys ranging from £250–£1,000.
- Mortgage Fees – Some lenders charge arrangement or valuation fees.
Financing Costs
Some landlords opt for interest-only mortgages, keeping monthly payments lower. Broker fees may also apply if you use an intermediary.
Ongoing Running Costs
Successful landlords budget for the day-to-day expenses of property ownership:
- Insurance – Buildings insurance is essential, but landlord policies provide wider cover such as rent protection and liability (typically £200–£800 annually).
- Ground Rent & Service Charges – Applicable on leasehold properties.
- Maintenance & Repairs – A good rule of thumb is to set aside 1% of the property’s value annually for general repairs, boiler servicing, replacements, and emergency call-outs.
Compliance & Legal Responsibilities
Landlords must meet strict safety and legal obligations, including:
- Gas Safety Certificate (annually, typically £60–£100).
- Electrical Installation Condition Report (EICR) (every 5 years, typically £150–£350).
- Energy Performance Certificate (EPC) (valid for 10 years, £100–£120, minimum rating E — due to rise to C).
- Fire Safety – Smoke and carbon monoxide alarms (typically £50–£100 each).
- Licensing – Some areas require landlord licences (£200–£1,000).
Letting & Management
If you appoint an agent, expect to pay:
- Tenant Find Service – Typically 100% of the first month’s rent.
- Full Management – Typically 10%–15% of monthly rent.
If self-managing, you’ll still face costs for referencing, inventories, and check-ins.
Void Periods & Turnover
Budget for periods without tenants — you’ll cover council tax, utilities, and re-letting costs. Between tenancies, refreshing the property with cleaning, repairs, or redecorating is often necessary.
Tax & Accounting
- Income Tax – Rental profits are taxed at your personal rate.
- Capital Gains Tax (CGT) – Payable when selling, at 18% for basic-rate taxpayers or 24% for higher-rate bands.
- Accountancy Fees – Professional tax advice can be worthwhile.
Hidden & Unexpected Costs
Even with careful planning, landlords should prepare for:
- Rent arrears or legal fees for evictions.
- Damage beyond deposit cover.
- Insurance excesses.
- Future regulation changes (e.g. the upcoming Renters’ Rights Bill).
Final Thoughts
Becoming a landlord in Walsall or Wolverhampton can be a profitable long-term investment, but it requires planning, compliance, and financial discipline. By understanding the true costs involved, you can make informed decisions and maximise your returns.
If you’re considering a buy-to-let or would like expert property management support, our lettings team at Skitts is here to help. Call us on 0121 520 2255 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it.
