Revealed in pounds and pence, the true cost of being a landlord

Rising maintenance costs are driving landlords into unprofitability, leaving a black hole in the finances of ordinary people who rely on property to supplement their wages or pension.

Some are being forced to sell up or target only profitable tenants, such as foreign workers, to help balance the books. Exclusive research for Telegraph Money by Aldermore, the bank, found that landlords spent an average of £1,443 last year on plumbers, builders, letting agents and other tradespeople.

In the worst-case scenario, where a property required substantial or unexpected work, owners were forced to shell out almost £7,500. These costs, coupled with a more stringent tax regime, have forced some investors to concentrate only on newly built properties, rather than investing in older housing stock, which is more prone to issues.

Costs for landlords can be large and varied. Aldermore found that more than half of investors (51pc) had paid for the services of a plumber in the past 12 months, making it the most common expense. Owners typically spent £311 last year to repair issues with pipes and showers.

Electricians were also commonly used by landlords, with 47pc calling on their services each year and spending an average of £319. Four in 10 landlords also used general tradespeople to complete odd jobs, costing an average of £442 a year.

However, by far the biggest cost to investors was for letting agents and property management companies. A third (31pc) of landlords use such services, spending an average of £1,125 per year. Cleaners, builders and roofers were among the other sources of expenditure for landlords.

Aldermore said that, in the worst case, where a house was found to have structural issues and needed other major works, an average landlord would spend £7,458 in a single year.

Ian Wragg, 61, is a landlord with 24 properties in South Yorkshire, but he is selling his property empire because of high costs. “A lot of landlords don’t think it’s worth it,” he said. “I’m looking to get out now and I’m selling my properties when I can.

“I barely made a penny last year, and I’ll make even less next year.”

Mr Wragg’s portfolio comprises older properties, which tend to have higher upkeep costs. He encouraged landlords to purchase newer properties to cut down on maintenance. “The costs go up every year, I just spent £1,800 installing a new boiler,” he said. “If I was starting today I wouldn’t have bought 24 old properties, I’d have bought 12 new properties instead.”

Richard Lambert of the National Landlords Association (NLA), a trade body for property investors, said that around a quarter of his members had signalled their intention to sell homes this year. He described the outlook for landlords as “bleak”.

“The typical landlord is wrongly portrayed as squeezing vast profits from their rental property,” he said. “Most make a profit – 84pc according to our figures – but their profit margin has been falling in recent years.”

The NLA suggested that landlords were increasingly offering additional benefits in order to attract the most profitable tenants – foreign workers and international students. In some cases, this has involved providing personal transport from the airport on arrival, offering an information pack about the local area and managing utility bills on behalf of the tenants.

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Mr Lambert said: “Landlords have no choice but to find ways to make their offering more attractive. Whether it’s offering super-fibre optic broadband, delivering gift baskets at Christmas, or offering to manage all bills, landlords have plenty of options.”

Others landlords are choosing to withdraw from the traditional rental market and let their properties on a short-term basis instead. By using websites such as Airbnb, investors can generate higher profits and face fewer regulations.

Arla Propertymark, a letting agent trade body, found that 46,000 properties had already been made unavailable for long-term tenants in this way. It warned that this number could reach 230,000, severely reducing choice for tenants.