Property maintenance costs account for a fifth of rental income

Property maintenance costs account for a fifth of rental income

8:30 AM, 25th August 2022, About a month ago 3

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Landlords are being warned that their rental property maintenance costs now account for more than a fifth of the average rental income of a property.

According to research by property maintenance solution provider, Help me Fix, the average cost of repairs has risen by 4.7% since the start of the year.

The firm has analysed the current cost of maintaining a property and how this has changed between January and June, as well as the proportion of rental income required to ensure a property remains fit for purpose.

Annual cost of maintaining a rental property

Their research shows that the current annual cost of maintaining a rental property now sits at an average of £2,864 across the UK.

This is a 4.7% increase since January, with an increase in the cost of materials and services, such as qualified tradespeople, contributing to the rise.

London is home to the highest annual maintenance cost at £5,379, but it’s the East Midlands where this cost has increased the most since January, climbing by 6%.

Maintenance requires 21.2% of rental income

With the average UK rent currently sitting at £13,524, this means that the cost of maintaining the average rental property now requires 21.2% of rental income.

This cost is highest in the East of England, where maintenance costs now account for 27.3% of the total average annual rental income, with the South East not far behind at 27%.

The proportion of rental income required to cover maintenance costs also sits above the national average in the East Midlands (26.2%), the South West (25.3%), the West Midlands (25.3%), London (24%), Wales (23.1%) and the North East (22.3%).

Costs have climbed since the start of the year

Ettan Bazil, the chief executive of Help me Fix, said: “With inflation currently at a 40-year high, the cost of maintaining a rental property has climbed by quite some margin since the start of the year.

“However, for many landlords and professional rental management firms, the escalating cost of materials has long been an issue.”

He added: “At the same time, the pandemic restrictions imposed during the numerous lockdowns have really shone a light on tenant welfare when it comes to the quality of accommodation.

“With the likes of the Build to Rent sector also driving standards upwards in this respect, it’s no longer acceptable to subject a tenant to subpar living conditions.

“So, while maintenance costs are now swallowing a considerable chunk of a rental property’s earning potential, it’s a necessity that simply can’t be ignored.”



Comments

Jerry Stone

13:27 PM, 25th August 2022, About a month ago

Interestingly I recently wrote to my M.P. about this subject about allowing home improvements against tax.
I actually got a response which I think sums up the issue with what M.P.'s think rental is about.
I have written back explaining that the point was to benefit the lowest tax payers who are the ones who rent by improvements in there living conditions and energy:Dear Peter,
Thank you for your email of 6 June to the Minister for Business, Energy and Corporate Responsibility, enclosing correspondence from your constituent, Mr Jerry Stone, regarding incentivising home improvement through the tax system. Your email has been passed to the Treasury and I am replying as Minister responsible for the UK tax system. I am sorry for the delay in my response.
Mr Stone suggests that landlords should be able to offset spending on home improvements for their rental properties against income. There are a wide range of factors to take into consideration when introducing new allowable expenses. It is likely that a new tax relief would have to be paid for, at least in part, by increased taxes for other taxpayers or reducing expenditure on public services. Tax reliefs will also be of greatest benefit to those paying higher rates of tax and do not benefit the lowest-earning individuals at all.
As with all aspects of the tax system, the Government keeps the tax treatment of deductions for landlords under review.
The Government has introduced VAT relief to incentivise homeowners moving to more environmentally friendly methods of powering homes. At Spring Statement 2022 theGovernment announced the expansion of the VAT relief on the installation of energy saving materials (ESMs) to residential accommodation in Great Britain. The changes reversed restrictions introduced in 2019 following a Court of Justice of the European Union ruling, including re-instating wind and water turbines as qualifying materials and removing complex eligibility conditions which prevented business and households from accessing the relief. Qualifying installations, including solar panels and heat pumps, will also benefit from a VAT zero-rate until April 2027.
The materials to which the relief applies can be found at: http://www.gov.uk/guidance/vat-on-energy-saving-materials-and-heating-equipment-notice-7086.
Overall, this represents an additional £280 million of support for investment in ESMs over the next five years.

Peter G View Profile

14:45 PM, 1st September 2022, About 4 weeks ago

Reply to the comment left by Jerry Stone at 25/08/2022 - 13:27You would think that MPs would want to improve the accommodation that tenants live in by encouraging landlords through tax breaks. But apparently not unless they are part of the drive to net-zero. Any other improvements for tenants is apparently not to be encouraged.

Old Mrs Landlord

11:04 AM, 2nd September 2022, About 3 weeks ago

Reply to the comment left by Peter G at 01/09/2022 - 14:45Wait 'til you see the recommendations in the consultation launched today by the DLUHC for implementing a Decent Homes Standard for the PRS.. It seems the idea is to improve homes for tenants entirely at the expense of parasitical landlords because we can easily afford it thanks to all the tax breaks we get and extortionate rents we charge our poor tenants, just ask Generation Rent if you doubt that. We already have to provide Homes fit for Human Habitation but apparently they are not good enough for today's renters.

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