Being a successful landlord in 2021 - The most profitable locations & true cost

by Luke Betts

This year hasn’t been easy on anyone and we’re less than a month in! But luckily there’s renewed hope for aspiring landlords in the form of a detailed report by insurer CIA Landlord, which has revealed a multitude of facts pertinent to achieving success in the rental market in 2021.

The report was split into a few sections - Firstly assessing the 69 cities in the UK, rating them for profitability based on a variety of monetary factors (Average property price, Mortgage amount, Extra monthly costs vs Average rent). 

Here are the Top 10 cities to invest in:

1.       Brighton - Monthly Profit: £571.85
2.       Bangor - Monthly Profit: £500.53
3.       Portsmouth - Monthly Profit: £479.27
4.       Leeds - Monthly Profit: £477.60
5.       Lancaster - Monthly Profit: £474.54
6.       Bristol - Monthly Profit: £453.20
7.       Coventry - Monthly Profit: £432.27
8.       Manchester - Monthly Profit: £425.48
9.       Nottingham - Monthly Profit: £410.21
10.     Salford - Monthly Profit: £393.33

Brighton tops the list of most profitable rental city for the second year running, likely due to average rent here exceeding £2,000 a month. 

The same test was then carried out for all 33 London boroughs. Interestingly only 6 of the 33 boroughs actually prove profitable:

1.       Barking - Monthly Profit: £261.10
2.       Brent - Monthly Profit: £241.28
3.       Newham - Monthly Profit: £183.48
4.       Westminster - Monthly Profit: £164.15
5.       Tower Hamlets - Monthly Profit: £150.98
6.       Southwark - Monthly Profit: £114.18

Location is more important than ever to ensure you stay in the black when making any buy-to-let investment, this is evident from merely glancing at the same figures from the previous year. In 2020 both Wandsworth & Hammersmith had average monthly rental profits of £1,028.55 & £1,454 respectively; this year they’re averaging losses of £-151.95 & £-195.76.

The final section of the report focussed on the all-encompassing costs incurred during landlordship. The first of which are the fixed fees that every landlord must pay, these are:

·       Tenancy Deposit Registration - £40 per tenant
·       Landlord Insurance - £170 a year
·       Energy Performance Certificate - £65 every 10 years
·       Gas Safety Certificate - £100 a year
·       National Insurance - £158.60 a year
·       Landlord Licence Fee - Avg. £51.95 a year

Totalling an average of £585.55 every year.

Never had to purchase a boiler before? Well the cost for a new one is around £1,500! You never know what can go wrong in a property, especially when you’re responsible for it all – The average cost of all appliances is £481.23.

Now if you’ve bought a property unfurnished don’t overlook what’s needed, the average cost of fully furnishing a 1 bedroom home (Including a double bed & mattress) is £1,314.65.

Richard Wayman, Finance Director at CIA Landlord had this to say on their findings:

“COVID-19 has undoubtedly shifted the way new landlords will be looking to invest in 2021, and our ranking makes it clear that considering location alongside price has never been more crucial. 

When looking into the true costs of being a landlord this year, it can certainly come as a surprise to some at just how expensive certain requirements are as well as the fluctuation in these costs.

Before taking your first step into the property ladder, we recommend you consider all of the costs involved in becoming a landlord and ensure you invest in an area that is stable and will be profitable for you in the long term.”

<< Return to listings