The Cost of Being a Landlord in 2022

An annual ranking by CIA Landlord has revealed the true cost of being a landlord and the most profitable area in the UK to invest. 

  • Newry, Northern Ireland ranked as the most profitable city for landlords followed by London, Belfast and Armagh

  • On average, UK landlords need to spend £592.60 in 2022, which includes average monthly mortgage costs, monthly fees for maintenance, alongside average letting agency fees.

  • St Albans was revealed as the worst city to become a landlord with an average monthly loss of £1,260.86

  • Only eight out of 33 London boroughs are profitable for landlords in 2022, with Westminster being the most profitable

  • Kensington and Chelsea is the least profitable London borough for landlords in 2022

COVID-19, stamp duty holidays, and fluctuating house prices have radically shifted the prospect of owning a buy-to-let property in 2022. However, it’s clear that location is more important than ever if you’re planning on making an investment this year.

Being a landlord can provide a lucrative income if planned correctly, but it’s not just about renting out a property. Many people may jump into it without fully understanding what’s required – especially when it comes to finances and additional expenses including maintenance costs and landlord insurance

CIA Landlord has put together an updated annual ranking for 2022 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 2022.

Brighton Loses Its Title as the Most Profitable City to Become a Landlord 

CIA Landlord Insurance

One of the main reasons people choose to become a landlord is through its opportunity to produce a passive income. If this is on your mind, it’s essential you select a location that can maximize your profits. 

As part of the research, CIA Landlord looked at the best cities to become a landlord based on the average property price, mortgage amount, average rent from tenants, and the monthly costs of being a landlord to calculate monthly profit.

Whilst Brighton took the title of the best city to become a landlord for the last few years, it has been revealed that in 2022 London is the most profitable city to become a landlord. Here, landlords can expect to make an average monthly profit of £996.76. Newry, Bangor, and Brighton follow with £746.51, £603.01, and £544.76 average profit per month respectively.

Top 10 places to become a landlord based on average property price, mortgage amount, average rent, and monthly costs vs profits:

Rank

City

Average Property Price

Mortgage Amount

Monthly Mortgage Amount 

Total fees

Total Monthly Profit 

1

London

£700,325.00

£501,899.58

£2,433.00

£9,429.72

£996.76

2

Newry

£141,417.00

£101,348.85

£491.00

£2,059.18

£746.51

3

Bangor

£178,561.00

£127,968.72

£620.00

£2,524.44

£603.01

4

Brighton

£462,871.00

£331,724.22

£1,608.00

£6,247.34

£544.76

5

Portsmouth

£260,596.00

£186,760.47

£905.00

£3,596.23

£533.76

6

Leeds

£254,464.00

£182,365.87

£884.00

£3,515.64

£531.76

7

Nottingham

£245,874.00

£176,209.70

£854.00

£3,399.75

£510.76

8

Manchester

£235,337.00

£168,658.18

£817.00

£3,247.76

£423.76

9

Salford

£214,635.00

£153,821.75

£746.00

£2,975.96

£418.76

10

Armagh

£102,339.00

£73,342.95

£355.00

£1,491.47

£397.51

St Albans Identified as the Worst Place to Become a Landlord in 2022

CIA Landlord Insurance

Although on the surface it seems that being a landlord is a constant flow of income, there are some cities where you’ll find yourself losing money. Due to the average property price, cost of a mortgage, monthly fees, and rent charge changing throughout COVID-19, if you're not careful there are a number of locations you will find yourself at a loss in profit per month in 2022.

The table below shows the worst cities to become a landlord in 2022:

Rank

City

Average Property Price

Mortgage Amount

Monthly Mortgage Amount 

Total fees

Total Monthly Profit 

1

St Albans

£609,712.00

£436,960.27

£2,118.00

£7,960.33

-£769.24

2

St Davids

£353,750.00

£253,520.83

£1,229.00

£4,626.61

-£599.74

3

Salisbury

£385,343.00

£276,162.48

£1,339.00

£5,057.89

-£543.24

4

Wells

£361,633.00

£259,170.32

£1,256.00

£4,760.84

-£458.24

5

St Asaph

£222,585.00

£159,519.25

£773.00

£2,931.78

-£454.99

6

Worcester

£300,811.00

£215,581.22

£1,045.00

£3,970.19

-£421.24

7

Ely

£328,224.00

£235,227.20

£1,140.00

£4,329.68

-£418.24

8

Truro

£367,255.00

£263,199.42

£1,276.00

£4,851.35

-£353.24

9

Chichester

£462,292.00

£331,309.27

£1,606.00

£6,100.71

-£324.24

10

Lichfield

£349,007.00

£250,121.68

£1,212.00

£4,617.69

-£319.24

Only Eight Out of 33 London Boroughs Are Profitable for Landlords in 2022

CIA Landlord Insurance

Our study also uncovers the true impact the COVID-19 pandemic has had on the capital’s housing market, identifying that the majority of London boroughs are unprofitable. The research reveals that London's profitability for landlords has increased slightly since January 2021 when just six out of 33 boroughs were profitable.

Rising property prices and decreasing rental rates are squeezing profit margins for landlords, leaving 25 out of 33 London boroughs unprofitable in 2022, although this is a slight rise from our ranking last year which showed that just six boroughs were profitable. 

The table below shows the most profitable London boroughs to become a landlord in 2022:

Rank

Borough

Average Property Price

Mortgage Amount

Total Fees

Monthly Mortgage Amount

Total Monthly Profit

1

Westminster

£1,093,779.00

£783,874.95

£13,886.30

£3,799.00

£2,651.76

2

Southwark

£715,005.00

£512,420.25

£9,135.84

£2,484.00

£1,603.76

3

Lambeth

£685,914.00

£491,571.70

£8,770.99

£2,383.00

£471.76

4

Hammersmith

£992,008.00

£710,939.07

£12,609.92

£3,446.00

£285.76

5

Newham

£388,973.00

£278,763.98

£5,046.85

£1,351.00

£154.76

6

Tower Hamlets

£549,139.00

£393,549.62

£7,055.60

£1,907.00

£144.76

7

Brent

£613,301.00

£439,532.38

£7,860.30

£2,130.00

£107.76

8

Barking

£370,528.00

£265,545.07

£4,815.52

£1,287.00

£36.76

9

Enfield

£464,308.00

£332,754.07

£5,991.68

£1,613.00

-£31.24

10

Kingston upon Thames

£764,617.00

£547,975.52

£9,758.06

£2,656.00

-£31.24

Westminster was identified as the most profitable London borough with an average profit of £2,651.76 per month, followed by Southwark with £1,603.76 and Lambeth making an average of £471.76. 

Whilst Westminster comes out on top as the most profitable London borough in 2022, it’s also where landlords pay the highest amount of fees at £13,886.30 per annum. Hammersmith, whilst not nearly as profitable, is the second most expensive in terms of fees as landlords can expect to pay £12,609.92 annually with an average profit of just £285.76.

Take a look at the table below revealing the boroughs that have seen the biggest shift in profit for landlords in 2022:

Rank

Borough

Total Monthly Profit 2021

Total Monthly Profit 2022

Difference in profit

1

Kingston upon Thames

-£575.83

-£31.24

+£2,548.17

2

Westminster

£164.15

£2,651.76

+£2,487.61

3

Southwark

£114.18

£1,603.76

+£1,489.58

4

Hammersmith

-£606.54

£285.76

+£892.30

5

Lambeth

-£348.21

£471.76

+£819.97

6

Islington

-£834.90

-£211.24

+£613.66

7

Wandsworth

-£606.28

-£133.24

+£473.04

8

Barnet

-£333.90

-£782.24

-£448.34

9

Camden

-£369.83

-£2,557.24

-£2,187.41

10

Kensington and Chelsea

-£2,271.19

-£5,955.24

-£3,684.05

Kensington and Chelsea is the Least Profitable London Borough for Landlords in 2022

CIA Landlord Insurance

Kensington and Chelsea, Camden, and Ealing were identified as the least profitable cities to become a landlord with average losses of £5,955.24, £2,557.24, and £864.24 respectively. 

It is important when considering becoming a landlord to identify locations where long-term profit is achievable as mortgage costs, monthly fees, and rent charges may find you at a loss in profit per month. 

The table below shows the worst London boroughs to become a landlord in 2022:

Rank

Borough

Average Property Price

Mortgage Amount

Total Fees**

Monthly Mortgage Amount

Total Monthly Profit 2022

1

Kensington and Chelsea

£2,224,144.00

£1,593,969.87

£28,062.96

£7,726.00

-£5,955.24

2

Camden

£1,246,090.00

£893,031.17

£15,796.53

£4,328.00

-£2,557.24

3

Ealing

£791,778.00

£567,440.90

£10,098.70

£2,750.00

-£864.24

4

Haringey

£707,242.00

£506,856.77

£9,038.48

£2,457.00

-£820.24

5

Richmond upon Thames

£938,322.00

£672,464.10

£11,936.61

£3,259.00

-£792.24

6

Barnet

£690,729.00

£495,022.45

£8,831.38

£2,399.00

-£782.24

7

Bromley

£562,986.00

£403,473.30

£7,229.27

£1,956.00

-£701.24

8

Lewisham

£528,615.00

£378,840.75

£6,798.20

£1,836.00

-£546.24

9

Merton

£665,520.00

£476,956.00

£8,515.21

£2,312.00

-£499.24

10

Greenwich

£631,811.00

£452,797.88

£8,092.45

£2,195.00

-£462.24

The Annual Required Fees To Become A Landlord in 2022

As part of the cost of being a landlord, there are fixed fees that you must adhere to. It’s important to make note of these and keep an eye on when they need to be renewed.

Required Fees

Frequency

Annual Cost (£)

Tenancy Deposit Registration

Every new tenant

£40.00

Landlord Insurance 

Yearly

£170.00

Energy Performance Certificate

10 Years

£77.50 

Gas Safety Certificate 

Yearly

£99.00

National Insurance 

Yearly

£158.60

Landlord Licence Fee

5 Years

£47.50 

Total Annual Cost (£)

£592.60

The Cost of Maintenance, Repairs, and Replacements for Landlords in 2022

CIA Landlord Insurance

One area that can cause setbacks to landlords' income is the cost of maintenance repairs and replacements. Whether it’s supplying a toaster for a new tenant or replacing an entire dishwasher, these costs soon add up.

The study revealed that the total cost of buying all household appliances, (dishwasher, fan oven, tumble dryer, fridge, washing machine, and boiler) comes to a hefty £3.732.00, with an average annual replacement cost of £38.82.

The table below shows the costs of appliances to take into account:

Big Appliance Replacements

Cost To Buy or Replace (£) (including installation)

Frequency of replacement (Years)

Annual Cost (£)

Monthly Cost (£)

Dishwasher

£620.00

10

£62.00

£5.17

Electric Fan Oven

£232.00

12.5

£18.56

£1.55

Tumble Dryer

£577.00

10

£57.70

£4.81

Fridge

£391.00

15

£26.07

£2.17

Washing Machine

£412.00

10

£41.20

£3.43

Boiler

£1,500.00

15

£100.00

£8.33

Total

£3,732.00

12.08

£51.48

£4.29

When it comes to furnishing your buy-to-let house, if you wish to provide basic household furniture, it’s important to take into account these costs as well. For example, the total cost of purchasing furniture, (bed frame, mattresses, sofa, wardrobe, drawers) comes to an average cost of £1,483.84 in a 1-bed house, with an average annual replacement cost of £130.16.

The table below shows the costs of furnishing:

Furnishing Fees

Cost To Buy or Replace

Frequency of replacement (Years)

Average Annual Cost for Furniture

Average Monthly Cost For Furniture

Double Bed

£208.00

8

£26.00

£2.17

Sofa

£489.00

11

£44.45

£3.70

Wardrobe

£314.00

15

£20.93

£1.74

Drawers

£157.00

15

£10.47

£0.87

Double Bed Mattress

£315.84

8

£39.48

£3.29

Total Cost for Furniture

£1,483.84

11.4

£130.16

£10.85 

Richard Wayman, Finance Director at CIA Landlord Insurance comments:

“COVID-19 has undoubtedly shifted the way new landlords will be looking to invest in 2022, 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 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.”

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 2022.

The monthly profit total has been calculated by taking the sum of the average rent, minus the 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

ao.com

www.argos.co.uk

www.home.co.uk

www.upad.co.uk

www.zoopla.co.uk

www.which.co.uk

www.nimblefins.co.uk

www.checkatrade.com

www.gov.uk

www.simplybusiness.co.uk

www.directlineforbusiness.co.uk

www.uswitch.com

www.which.co.uk

www.idealhome.co.uk

www.thespruce.com

themvacuums.com

www.dreams.co.uk

www.gocompare.com