The Cost of Being a Landlord 2023
20-02-2023 | Landlord NewsWe have conducted our annual ranking to reveal the true cost of being a landlord in 2023, as well as the most and least profitable locations to become a landlord this year.
- Only three cities are profitable for landlords in 2023
- None of the 33 London boroughs are profitable for landlords
- Glasgow, Scotland revealed as the most profitable city to be a landlord
With a backdrop of higher mortgage costs, fluctuating interest rates and tax changes, it is an uncertain time for anyone wanting to purchase a property. Whilst the situation looks rocky in the short-term, it’s important to remember purchasing a property is a long-term investment.
Looking into interest-only mortgages means landlords will have smaller outgoings, meaning they’ll be more able to turn a month on month profit.
CIA Landlords has put together an updated annual ranking for 2023 looking at every cost associated with being a landlord in the UK and where they lie. From licence fees to maintenance costs, the research gives an overview of the best and worst cities and places to become a landlord in 2023.
In these uncertain times it’s more important than ever to be aware of the costs associated with becoming a landlord, including maintenance fees and landlord insurance.
Glasgow revealed as the best city to be a landlord, for the first time
Mortgage and interest rate increases as well as higher expenditure have meant only three of the cities researched are profitable for landlords in 2023. This price takes into account the average monthly mortgage payment, interest rate and general expenditure a landlord has to pay when compared to the average rent price of properties in the city.
Landlords in Glasgow can expect a monthly cashflow of nearly £80, with the average price to buy a property being just under £200,000 – the fifth cheapest of all the cities we looked at.
All of the cities in the top ten are in the northern half of the United Kingdom, showing location can impact the profitability of a propery. Newcastle-Upon-Tyne and Liverpool sitting in second and third place, earning landlords nearly £50 and £6 respectively.
2022 and 2021 saw London and Brighton taking the top spot, both of which don’t feature in the top 10 this year. Manchester, Nottingham and Leeds are the only cities to remain in the top 10 year-on-year, previously sitting in 8th, 7th and 6th respectively.
Brighton, 2021’s best city, revealed as the worst city to be a landlord in 2023
The changing property market is especially highlighted by the fact that Brighton has been revealed as the worst city to become a landlord – despite it being the best just two years ago. Landlords here can expect to be making a loss of just over £450 a month based on average rent being £1,158. However, the city does have the second highest property purchase price, sitting just behind London, at nearly £500,500.
Landlords with property in the Welsh capital, Cardiff, can expect to make a loss of just over £410, and those in Bournemouth losing just under £370 a month.
Last year saw London in the top spot with landlords making on average £3,996.76 a month, whereas now, the UK capital sits in sixth position for the worst cities to become a landlord, with landlords seeing monthly losses of around £215.
Barking and Dagenham returns to top position as the best London borough to be a landlord
There have been many conversations around a housing crash in the UK’s capital looking likely in 2023, but while mortgage and interest rates are still so high, it looks like for many, purchasing a property may still be difficult.
This difficulty has therefore resulted in an increased demand for rental properties, and despite the higher prices tenants are prepared to pay to live in London, the monthly rental cost is still not covering the outgoings of the average landlord.
Barking and Dagenham is the best London borough to become a landlord, taking back the top spot from Westminster which won in 2021. However, unlike previous years where landlords were able to turn a profit, landlords in Barking and Dagenham will still be making a monthly loss of just over £750.
The table below shows the best London boroughs to become a landlord in 2023:
| Index | London Borough | Average Property Price | Average Rent | Monthly Mortgage Payment (over 25 years) | Total Fees | Total Monthly Cashflow – Interest Only | Total Monthly Cashflow |
| 1 | Barking and Dagenham | £368,496.00 | £1,450.00 | £1,919.90 | £281.30 | £1,168.70 | -£751.20 |
| 2 | Newham | £447,054.00 | £1,750.00 | £2,329.19 | £329.30 | £1,420.70 | -£908.49 |
| 3 | Bexley | £446,777.00 | £1,450.00 | £2,327.75 | £281.30 | £1,168.70 | -£1,159.05 |
| 4 | Tower Hamlets | £557,768.00 | £2,050.00 | £2,906.02 | £377.30 | £1,672.70 | -£1,233.32 |
| 5 | Havering | £457,369.00 | £1,400.00 | £2,382.93 | £273.30 | £1,126.70 | -£1,256.23 |
| 6 | Croydon | £479,165.00 | £1,500.00 | £2,496.49 | £289.30 | £1,210.70 | -£1,285.79 |
| 7 | Sutton | £500,115.00 | £1,595.00 | £2,605.64 | £304.50 | £1,290.50 | -£1,315.14 |
| 8 | Greenwich | £522,132.00 | £1,700.00 | £2,720.35 | £321.30 | £1,378.70 | -£1,341.65 |
| 9 | Redbridge | £530,973.00 | £1,615.00 | £2,766.42 | £307.70 | £1,307.30 | -£1,459.12 |
| 10 | Waltham Forest | £559,370.00 | £1,650.00 | £2,914.37 | £313.30 | £1,336.70 | -£1,577.67 |
Last year, only eight boroughs were profitable, including Newham and Barking and Dagenham – both of which remain in the top ten but have lost their profitability status.
Kensington and Chelsea is the least profitable London borough for landlords in 2023 for the third year in a row
The three most expensive London boroughs, in terms of average property price and rent, all sit in the top three positions as the worst London boroughs to become a landlord in 2023.
Landlords can expect to pay over £2,400,000 for a property in Kensington and Chelsea. With monthly rent being slightly over £4,000, landlords will lose just over £9,000 a month when paying off both mortgage and interest.
Westminster and Camden sit in second and third place, with landlords losing nearly £5,100 and £4,200 a month respectively.
The table below shows the worst London boroughs to become a landlord in 2023:
| Index | London Borough | Average Property Price | Average Rent | Monthly Mortgage Payment (over 25 years) | Total Fees | Total Monthly Cashflow – Interest Only | Total Monthly Cashflow |
| 1 | Kensington and Chelsea | £2,409,002.00 | £4,008.00 | £12,551.12 | £690.58 | £3,317.42 | -£9,233.70 |
| 2 | Westminster | £1,549,012.00 | £3,600.00 | £8,070.49 | £625.30 | £2,974.70 | -£5,095.79 |
| 3 | Camden | £1,211,798.00 | £2,600.00 | £6,313.57 | £465.30 | £2,134.70 | -£4,178.87 |
| 4 | Hammersmith and Fulham | £1,057,351.00 | £2,492.00 | £5,508.89 | £448.02 | £2,043.98 | -£3,464.91 |
| 5 | Richmond | £984,892.00 | £2,200.00 | £5,131.37 | £401.30 | £1,798.70 | -£3,332.67 |
| 6 | Islington | £906,856.00 | £2,383.00 | £4,724.80 | £430.58 | £1,952.42 | -£2,772.38 |
| 7 | Barnet | £769,465.00 | £1,800.00 | £4,008.98 | £337.30 | £1,462.70 | -£2,546.28 |
| 8 | Merton | £793,274.00 | £1,962.00 | £4,133.03 | £363.22 | £1,598.78 | -£2,534.25 |
| 9 | Wandsworth | £861,577.00 | £2,400.00 | £4,488.89 | £433.30 | £1,966.70 | -£2,522.19 |
| 10 | Haringey | £763,718.00 | £1,850.00 | £3,979.04 | £345.30 | £1,504.70 | -£2,474.34 |
Interestingly, Westminster was one of the best Boroughs to be a landlord last year, showing how rocky the market currently is.
The annual required fees to become a landlord in 2023
Aside from mortgage repayments and letting agent fees, landlords also have other fixed fees they must be aware of when taking on a new property, or wanting to purchase a buy-to-let.
Most of these fees are the same regardless of location, other than a landlord license fee – which needs updating every three years – that is dependent on which part of the UK you live in.
| Required Fees | Frequency | Annual Cost | Monthly Cost |
| Tenancy Deposit Registration | Every new tenant | £40 | £3.33 |
| Landlord Insurance | Yearly | £170 | £14.17 |
| Energy Performance Certificate | Every 10 years | £7.75 | £0.65 |
| Gas Safety Certificate | Yearly | £80.00 | £6.67 |
| National Insurance: Class 2 – profits are above £6,515 per year |
per week | £163.80 | £13.65 |
| Landlord License Fee – England | Every 5 years | £130.00 | £10.83 |
| Landlord License Fee – Wales | Every 5 years | £28.80 | £2.40 |
| Landlord License Fee – Scotland | Every 3 years | £22.00 | £1.83 |
| Landlord License Fee – Northern Ireland | Every 3 years | £23.33 | £1.94 |
The majority of landlords ensure white goods are fitted for the property, and may occasionally need to buy new appliances to replace broken ones, these costs are listed below:
Fully furnishing a property costs just over £13.50 per month
Depending on how you decide to let your property, whether it be fully-furnished, partly-furnished or un-furnished, you may also need to consider how much it will cost to buy furniture items.
It can cost nearly £2,000 to fully furnish a property, however when you spread these costs monthly, this accounts for only £13.63, so it may be worthwhile considering this option as you can then rent your property for a higher price. A sofa is the most expensive piece of furniture to buy, at just over £700, but this investment should last around 11 years.
As the property market is so uncertain at the moment, it can be more important than ever to ensure you’re fully aware of the costs of becoming a landlord or taking on another property. It’s more important than ever to invest in good quality landlord insurance which can help cover issues such as a loss of rent and the contents you put into the property.
Methodology
In order to calculate the best city to become a landlord, we analysed every cost from maintenance and furnishing to letting agent fees, safety certificates, national insurance, licencing fees, tenancy deposit registration, and landlord insurance costs. This was combined with the average mortgage amount, rental rates, and property prices across 69 UK cities and 33 London boroughs to determine what were the best areas to become a landlord in 2023.
The monthly cashflow total has been calculated by taking the sum of the average rent, minus the monthly mortgage, interest and monthly fees.
The monthly cashflow – interest only, has been calculated by taking the sum of the average rent, minus only the interest of a monthly mortgage, and monthly fees.
The total fees for landlords include arrangement, letting agent and monthly additional fees.
Annual landlord licence fee cost is taken from an average of England, Wales, Scotland and Ireland.
Sources
For a full list of sources please contact charlotte.crowther@kaizen.co.uk
We won't be beaten on any like for like landlord insurance quote.
Get a quote