As another tax year recently came to a close, annual account statements have been sent out to all of my landlords who use my fully managed service. It is something I include (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 e.g., my management fees and any maintenance costs. It’s similar to what they receive 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 This is increasingly important at a time when the full deduction of mortgage interest has been taken away, having been replaced by a (often lesser) ‘tax credit’.
It also gives me some great figures to analyse, which I wanted to share with you.
The average rent my landlords are achieving is £1,100pcm, which is 11% higher than the current average rent in Chichester of £995pcm. Plus, they have received all of the rent due to them. This time last year, I seriously questioned whether I’d be able to make that statement again, as the impact of Covid-19 began to bite. With some swift management and guidance for those tenants who needed it though, I’m quite proud to have maintained that great track record.
What’s more is that my unique fixed-fee structure is proving to be excellent value for my landlords; demonstrated by an average charge of just 9.1% for an award-winning full management service. One landlord is paying just 5.7% as their property achieves a particularly high rent, meaning my fixed fee proves to be even better value for them.
What is also interesting to see is that my landlords are spending £558 a year on average on property maintenance, which is just 4.5% of the total rent they receive. Considering that figure includes a large proportion of properties that needed to comply with the new electrical regulations, it is remarkably low.
Common lettings advice is to set aside 10% of your annual rent to account for property maintenance, so 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, but also 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 on such works. I’ll also typically run through a few simple steps with tenants when issues do 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.