Letting property - How much for maintenance?

mgarl10024

Hi,

I know this will vary wildly depending on a whole range of factors - so I'm just after rough answers.

I let out a 3 bed terraced property in the South West, unfurnished, and in pretty good condition.

When I started, I wanted to ensure that I always had the money to maintain the property (and to insulate my own personal finances from shocks), so the 'house' has it's own bank account, and it also has a separate 'pot' of money earmarked for "maintenance" which the 'house' pays into every month.
Initially, I thought I was being quite generous by allocating £50/mth. However, after 2 years, I am starting to realise that this isn't sufficient.

In an attempt to answer this question, I've been tinkering in Excel and have tried to list all the items in the property which will require renewal (boilers, roofs, carpets, kitchens...), their cost to do so, and their expected lifetimes - resulting in a figure over £200/mth.

So, this begs the question - for similar size properties, what do regular landlords put aside? And even if they don't put it aside, what has experience told them are the rough monthly/annual maintenance costs for a similar property to mine?

Thanks for your help,

LittleMax

I'm not sure how many actually do this, and is certainly one of the things they don't tell you about on all the property programmes when they manage to convince everyone how much money is to be made by investing in property.

We moved house 3 years ago and for a variety of reasons kept our old house and rented it out. 3 years on our tenants have moved out, and we got quotes for replacing the boiler (which is over 15 years old and getting flaky). This then led to doing the type of number crunching you have done - a bathroom would be needed in another year or so and then after that the current kitchen would be getting to the end of its life.

We have decided to sell - otherwise we would be putting additional money into keeping the property updated, and not getting any benefit from it. Better to pay off our own mortgage and enjoy a new kitchen and bathroom myself! However friends can't understand this at all, they tell us we are mad. You should keep it on, it's an investment, they keep telling us!

HappyMJ

£100 a month? Could be anything. A brand new property won't need anything but an older property would need much more.

£200 sounds a lot though.

thesaint

We usually work on a property needed 10% of it's income spending on maintenance/repairs. Sometimes the amount will be nil, other times it will be twice that amount.

If it is more than that more often than not, we look to offload the property.

Stating the amount as a £ figure is kind of pointless.

AlexMac

Fascinating; this Q made me crunch the numbers; we've owned three (currently two) BTLs which cost between £34k (16 years ago) and £152k (4 years ago) and the two we still have are probably worth north of £175k...

We've spent a total of over £60k on improvements and maintenance (excluding the non-maintenance elements of the service charges; they are/were flats) which averages out at an eye-watering £2.5k per flat p.a.!

But that includes a series of one-offs; initial or mid-term kitchen and bathroom refurbs, rewire/re-plumbs, three boilers and window replacements by the freeholder which ranged from £4k-£20k plus and added up to around £40k plus. So stripping those out, the routine maintenance averages about £50 per month (a fourth BTL wreck, bought in 1997 for £70k, improved for £30k and sold in 2001 for £180k is excluded from all these averages as it was untypical).

Which doesn't really help you; as it gives you a range between £50per month/£600pa without boilers, refurbs, rewire, window/roof replacement etc, or £200+ per month if you want to build up a contingency for these in the hope that no big bills hit before thyere's cash in the sinking fund!

ognum

I don't understand how anyone can not know these figures if they are providing a correct return to HMRC or keeping a record of their capital investment.

My properties have a management charge of 7-8%. Maintenance equalised over the properties of about 10% and of course I have a tax bill.

I keep my rents in a dedicated interest bearing bank account and pay all outgoings from this account including my tax.

ognum

mgarl10024 wrote: »

Hi,

I know this will vary wildly depending on a whole range of factors - so I'm just after rough answers.

I let out a 3 bed terraced property in the South West, unfurnished, and in pretty good condition.

When I started, I wanted to ensure that I always had the money to maintain the property (and to insulate my own personal finances from shocks), so the 'house' has it's own bank account, and it also has a separate 'pot' of money earmarked for "maintenance" which the 'house' pays into every month.
Initially, I thought I was being quite generous by allocating £50/mth. However, after 2 years, I am starting to realise that this isn't sufficient.

In an attempt to answer this question, I've been tinkering in Excel and have tried to list all the items in the property which will require renewal (boilers, roofs, carpets, kitchens...), their cost to do so, and their expected lifetimes - resulting in a figure over £200/mth.

So, this begs the question - for similar size properties, what do regular landlords put aside? And even if they don't put it aside, what has experience told them are the rough monthly/annual maintenance costs for a similar property to mine?

Thanks for your help,

What percentage is £200 of your rent?

mgarl10024

ognum wrote: »

What percentage is £200 of your rent?

A lot!
At 895pcm for 11mths occupancy per year, £200/mth is approaching 25%, where £50 was 7%.
This is why it just seems a lot to me.

To help (and I hope this renders ok - can't find a nice way to share it) below are my rough calcs. As I said above, I'm not trying to itemise each screw, but just to get a crude monthly value.

Area Area Category Cost Lifetime (yrs) Cost per mth
Bathroom Appliance Shower £80.00 3 £2.22
Bathroom Appliance Extractor Fan £50.00 15 £0.28
Bathroom Fixtures Renewal £3,000.00 20 £12.50
Bathroom Flooring Carpet £150.00 15 £0.83
Bedroom 1 Flooring Carpet £350.00 15 £1.94
Bedroom 2 Flooring Carpet £350.00 15 £1.94
Bedroom 3 Flooring Carpet £200.00 15 £1.11
Garage Building Up and over door £1,000.00 20 £4.17
Garage Building Windows £1,000.00 20 £4.17
Garage Building Roof £1,000.00 100 £0.83
Garage Building Wooden Door £200.00 20 £0.83
Garage Electrical Rewire £1,000.00 40 £2.08
Garden Building Patio, Walls, etc. £1,500.00 40 £3.13
Hallway Flooring Carpet £500.00 10 £4.17
House Building Windows £5,000.00 15 £27.78
House Building Exterior Doors £2,000.00 15 £11.11
House Building Roof £4,000.00 100 £3.33
House Electrical Rewire £4,000.00 40 £8.33
House Heating Boiler £2,000.00 20 £8.33
House Heating Radiators + pipework £1,500.00 30 £4.17
House Heating Service £50.00 1 £4.17
House Heating Fireplace £400.00 25 £1.33
House Security Alarm £1,000.00 25 £3.33
Kitchen Appliance Cooker £300.00 5 £5.00
Kitchen Appliance Hob £200.00 5 £3.33
Kitchen Appliance Cooker Hood £100.00 5 £1.67
Kitchen Fixtures Renewal £4,000.00 10 £33.33
Lounge Flooring Carpet £500.00 10 £4.17

Total: £159.60/mth (add on some conginency, and some money for little regular costs - insurance, safety checks, etc. and you're around £200.

HappyMJ

mgarl10024 wrote: »

A lot!
At 895pcm for 11mths occupancy per year, £200/mth is approaching 25%, where £50 was 7%.
This is why it just seems a lot to me.

To help (and I hope this renders ok - can't find a nice way to share it) below are my rough calcs. As I said above, I'm not trying to itemise each screw, but just to get a crude monthly value.

Area Area Category Cost Lifetime (yrs) Cost per mth
Bathroom Appliance Shower £80.00 3 £2.22
Bathroom Appliance Extractor Fan £50.00 15 £0.28
Bathroom Fixtures Renewal £3,000.00 20 £12.50
Bathroom Flooring Carpet £150.00 15 £0.83
Bedroom 1 Flooring Carpet £350.00 15 £1.94
Bedroom 2 Flooring Carpet £350.00 15 £1.94
Bedroom 3 Flooring Carpet £200.00 15 £1.11
Garage Building Up and over door £1,000.00 20 £4.17
Garage Building Windows £1,000.00 20 £4.17
Garage Building Roof £1,000.00 100 £0.83
Garage Building Wooden Door £200.00 20 £0.83
Garage Electrical Rewire £1,000.00 40 £2.08
Garden Building Patio, Walls, etc. £1,500.00 40 £3.13
Hallway Flooring Carpet £500.00 10 £4.17
House Building Windows £5,000.00 15 £27.78
House Building Exterior Doors £2,000.00 15 £11.11
House Building Roof £4,000.00 100 £3.33
House Electrical Rewire £4,000.00 40 £8.33
House Heating Boiler £2,000.00 20 £8.33
House Heating Radiators + pipework £1,500.00 30 £4.17
House Heating Service £50.00 1 £4.17
House Heating Fireplace £400.00 25 £1.33
House Security Alarm £1,000.00 25 £3.33
Kitchen Appliance Cooker £300.00 5 £5.00
Kitchen Appliance Hob £200.00 5 £3.33
Kitchen Appliance Cooker Hood £100.00 5 £1.67
Kitchen Fixtures Renewal £4,000.00 10 £33.33
Lounge Flooring Carpet £500.00 10 £4.17

Total: £159.60/mth (add on some conginency, and some money for little regular costs - insurance, safety checks, etc. and you're around £200.

eeek based on that and my 20 year old house I've got a lot of unplanned expenses coming up and I've only budgeted £100 per month for all maintenance expenses as I stated earlier.

I replace carpets much more often than 15 years. I'm now on the 5th carpet in 20 years. Tenants like a property with brand new carpet and I just put in cheap carpet so I don't expect a long life out of it. For me £750 does 3 bedrooms, hall, stairs, landing and living room.

My garage up and over door is 20 years old and still in good condition. I think another 20 years and it'll still be okay.

I've still got the boiler from 20 years ago and it's still in good condition however the annual maintenance costs are much higher at £150 per year.

The gas fire in the lounge is still working fine. It's rarely used and if it were to become uneconomical to repair I'd just cap it off. It's just a decorative fire and doesn't add much heat to the room.

The cooker and hob I have replaced at the 15 year point. They should last more than 5 years. I replaced the kitchen door fronts at the same time and expect the kitchen cabinets to last at least another 10 years.

The house security alarm became uneconomical to repair when it was 10 years old and I've not bothered replacing it.

I should really do a spreadsheet of my own.....one day....

Thrugelmir

LittleMax wrote: »

I'm not sure how many actually do this, and is certainly one of the things they don't tell you about on all the property programmes when they manage to convince everyone how much money is to be made by investing in property.

Should they need to point out the obvious? Letting property is a business not an investment.

mgarl10024

thesaint wrote: »

We usually work on a property needed 10% of it's income ...
Stating the amount as a £ figure is kind of pointless.

I understand your point that if a property is too expensive to maintain that you offload it, and you make this decision by comparing the maintenance cost to the income (keeping under 10%).

However, can I ask for a bit of clarification as to why setting a £ amount seems pointless? Aren't maintenance costs of a property going to be fixed (and so a £ amount is useful) whereas the income could be variable?