Pros and Cons of Being a Landlord
Whether you’re new to the property game or you’ve been managing them for a while, this comprehensive guide to the advantages and disadvantages of being a landlord is here to help. Read on for everything you need to know.
Benefits of Being a Landlord
There are many benefits to being a landlord, with financial security behind a lot of them. However, there are personal and even social rewards that come with managing property.
1. Income
Arguably the biggest benefit to gain from being a landlord is the regular monthly income from your tenant(s). If you own the property outright then the payments can offer an even greater boost to your income, or they can help repay your buy-to-let mortgage if you have one.
2. Tax relief
Many of the business expenses that come with a rental property are tax deductible!
This includes repairs and maintenance, alongside less obvious costs such as insurance, accounting processes, and other professional services used exclusively for your rental property.
3. Pension
You wouldn’t be alone if you wanted to rent out a property for your future financial well-being. A government survey demonstrated that this was the second biggest reason for becoming a landlord.
If you’re not yet retired, you can use the tenancy payments as pension contributions. If you are retired, then renting out a property gives you an additional source of income on top of your pension.
4. Tangible security
Many people feel that investing their money into physical assets is safer than less tangible options, such as the stock market. If well-maintained, a home can reliably continue to produce income long after the mortgage is paid, and can be passed down to next of kin to continue managing.
Of course, if you choose to bequeath the property, it will be subject to inheritance tax – so it is worthwhile reading up on this before deciding.
5. Long-term returns
The longer you own your property, generally speaking, the more equity you own and the more profit you seek to make from the property. Plus, property value typically grows over time, increasing your return on investment.
6. Skills and professional independence
If you work well independently, being a landlord can allow you to flourish and help highlight and develop certain skills.
If you’re the kind of person that can set your own hours and are comfortable making all the decisions, that’s great, because being a landlord is essentially being your own boss.
Even better if you’re competent with home-repair jobs, you can manage problems effectively, or you have good people or organisational skills. Managing a property can let these qualities shine. In areas you’re lacking you can hire services to complement your abilities.
7. Affordable housing
The final pro to being a landlord is contributing to a better society in terms of affordable housing. Landlords can contribute positively to the housing market by keeping homes well-maintained and allowing them to remain available to those who don’t own a house yet.
Challenges of Being a Landlord
There is a multitude of advantages to being a landlord, but as with everything, there are also risks and drawbacks that need to be considered.
1. Time-consuming
Managing a property requires investing a lot of time. Committed attention and decision making is often required, which is why many choose to pay property management agencies to alleviate some of this responsibility.
Our management service offers peace of mind for those looking to outsource some or all of their management responsibilities.
2. Financial costs
As being a landlord inevitably means incurring expenses, a rental property, therefore, requires thorough budgeting. Repairs and maintenance, for example, are two prevalent costs to be aware of.
Roughly 1% of a home’s value is spent on maintenance annually, and on top of that, there should be a budget for longer-term repairs such as a new roof (every 15-20 years), or appliance updates (5-10 years).
3. Tax
Despite certain tax breaks, you will have to pay tax on the rent you receive and also Capital Gains Tax (tax on the profit you make when you sell your property).
There is also an extra 5% Stamp Duty Land Tax (SDLT) when you buy a second residential property.
4. Legal responsibilities
You’ll need to stay up to date on all of the legislative obligations of a landlord, such as providing a property EPC to tenants and protecting their deposit in a government-approved scheme.
But our easy landlord checklist for 2025 can keep you right! It comes with a simple, downloadable checklist to make sure you cover all bases.
5. Tenant risks
The vast majority of tenants, of course, are decent people, but it only takes one tenant to permanently damage a home. Screening occupants is an important step in avoiding unpleasant, stressful, or costly encounters. Our tenant-finding service uses the latest referencing technology to find the best candidates for you.
6. It’s not a liquid asset
You’ll typically see the best returns on a property when you hold it long-term – though this does mean that your money is tied into a property, rather than being easily accessible. Even when you do decide to sell the property, the process may take a while.
7. Market risk
Rents and property values fluctuate and you can’t always predict them. The economy and unexpected things in the wider world affect the rental market. The coronavirus pandemic, for example, saw the government extend notice periods to four months.
So, is being a landlord right for you?
If, after you’ve considered these pros and cons, you’re ready to become a landlord, fantastic – explore our guide to renting out your house for a comprehensive process on letting a property.
If you’re feeling unsure about undertaking everything on your own, get in touch to see where we could fit in.
