Thursday, 30 April 2020

How much are Chichester’s landlords spending on property maintenance?

Drill, Blueprint, Nails, Tape measure, building tools 
As the tax year recently came to a close, annual account statements were sent out to all of my landlords who employ me on a full management basis. It’s something I do (free of charge) as part of my lettings service, but I think it will make my landlords (or their accountants!) lives easier come self-assessment time.

The statement breaks down the total rent they have received in the tax year for each property, along with any deductions that were made i.e. my management fees and any maintenance costs. It’s similar to what I send each month when the rent comes in, but this time for the whole tax year.

Not only is this a nice overview for the landlord, whilst again demonstrating my complete transparency in regards to fees, but it also ensures all costs are accounted for so that they can claim the maximum tax relief. This is increasingly important at a time when mortgage interest relief for landlords is reducing.

It also gives me some great figures to analyse, which I wanted to share with you.

The average rent my landlords are achieving is £1,125pcm, which is 13% higher than the current average rent in Chichester of £995pcm. Plus, they have received all of the rent due to them i.e. there were no non-paying tenants all year - phew! Unfortunately, I’m already wondering whether the fallout from Covid-19 will end that great track record, but the financial stimulus packages announced should go some way to helping tenants in that regard.
What’s more is that my unique fixed-fee structure is proving to be excellent value for my landlords; demonstrated by my landlords being charged a total of just 9% for their full management service on average. One landlord is paying just 6.2% as their property achieves a particularly high rent, meaning my fixed fee proves to be even cheaper for them.

What was also interesting to see is that my landlords are spending £450 a year on average on property maintenance, which is just 3.9% of the total rent they receive.

As common lettings advice is to set aside 10% of your annual rent to account for property maintenance, it seems my landlords are doing far better than this. I suspect this is partly because I tend to manage more modern properties, which should inherently have fewer issues, and because I tend to endorse the attitude of ‘prevention being better than cure’ i.e. spending a little in the short-term to save a lot in the long-term.

I hope it’s also partly down to the carefully selected maintenance contractors I use, who offer good value for money, plus the fact I don’t add a mark-up to maintenance costs or charge additional commission. I also often run through a few simple steps with tenants when issues occur, in case we can resolve them without the need for paid help.

If you’d like to discuss the ins and outs of how I can make the management of your rental property a little bit easier and perhaps more cost-effective, please get in touch.

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