Brighton revealed as the most profitable city to become a landlord, beating London to top spot

study by CIA Landlord has looked into the true cost of being a landlord and where in the UK is the most profitable area to invest in.

  • Brighton ranked as most profitable city for landlords making an average monthly profit of £668.95, beating London to top place!
  • The study by CIA Landlord reveals UK landlords need to spend a whopping £925.40 per month in costs
  • Solihull revealed as the worst city to become a landlord making a loss of -£207.41 a month

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 financially.

CIA Landlord have put together a study looking at every cost associated with being a landlord. From licence fees to maintenance costs, the research gives an overview of the best and worst places to become a landlord in the UK.

Brighton Ranks First in the Top 10 Places to Be a UK Landlord in 2020

One of the main reasons people choose to become a landlord is through its opportunity for passive income. If this is on your mind, it’s important you choose a location where you can maximise 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 cost, average rent, and the monthly costs of being a landlord to calculate monthly profit.

Rank City Average Property Price Mortgage Cost Average Rent Monthly Mortgage Monthly Landlord Costs* Monthly Profit**
1 Brighton £ 365,250 £ 261,762 £ 1,993 £ 1,261.83 £ 62.22 £ 668.95
2 London £ 475,458 £ 340,744 £ 2,275 £ 1,642.56 £ 62.22 £ 570.22
3 Leeds £ 189,738 £ 135,978 £ 1,150 £ 655.49 £ 62.22 £ 432.29
4 Bristol £ 286,432 £ 205,276 £ 1,400 £ 989.53 £ 62.22 £ 348.25
5 Manchester £ 185,333 £ 132,821 £ 997 £ 640.27 £ 62.22 £ 294.51
6 Nottingham £ 147,667 £ 105,828 £ 849 £ 510.14 £ 62.22 £ 276.64
7 Belfast £ 133,620 £ 95,761 £ 732 £ 461.62 £ 55.31 £ 215.07
8 Newcastle £ 164,596 £ 117,960 £ 833 £ 568.63 £ 62.22 £ 202.15
9 Glasgow £ 136,516 £ 97,836 £ 690 £ 471.62 £ 54.06 £ 164.32
10 Coventry £ 190,220 £ 136,324 £ 875 £ 657.15 £ 62.22 £ 155.63

*The landlord monthly costs have been calculated by taking the average monthly sum of tenancy deposits, landlord insurance, energy performance certificates, gas safety certificates, national insurance, licence fee, average appliance costs and average furniture costs. **The monthly profit total has been calculated by taking the sum of the average rent, minus the mortgage and monthly fees.

Solihull Ranks Worst Place to Become a Landlord in 2020

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 cost of a mortgage, monthly fees and rent charge, there are a number of locations you might find yourself at a loss in profit per month.

The table below shows the worst cities to become a landlord in 2020.

Rank City Average Property Price Mortgage Cost Average Rent Monthly Mortgage Monthly Landlord Costs* Monthly Profit**
1 Solihull £ 288,068 £ 206,448.73 £ 850 £ 995.19 £ 62.22 -£ 207.41
2 Sheffield £ 171,848 £ 123,157.73 £ 550 £ 593.68 £ 62.22 -£ 105.90
3 Bradford £ 138,017 £ 98,912.18 £ 494 £ 476.81 £ 62.22 -£ 45.03
4 Wakefield £ 151,743 £ 108,749.15 £ 576 £ 524.23 £ 62.22 -£ 10.45

Table 2. The cities where you’d make a loss becoming a landlord.

The Annual Required Fees to Become A Landlord Costs £609.95

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.

Fees Frequency Annual Cost (£)
Tenancy Deposit Every new tenant £40
Landlord Insurance Yearly £179
Energy Performance Certificate 10 Years £65
Gas Safety Certificate Yearly £80
National Insurance Weekly £156*
Licence Fee Every 5 Years £51.95**
  Total Annual Cost (£) £609.95

Table 3. The costs required to be a landlord.

*National insurance fee based on profits being between £6,365 and £8,632 a year. **Annual licence fee costs taken from an average of England, Wales, Scotland and Ireland.

The Cost of Maintenance Repairs and Replacements 

One area that can cause setbacks to a landlord’s 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 average cost of buying all household appliances (dishwasher, fan oven, tumble dryer, fridge, washing machine and boiler) comes to a hefty £3,652.88, with an average annual replacement cost of £50.38.

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 £1,314.65 in a 1 bed house, with an average annual replacement cost of £115.32.

Richard Wayman, Finance Director at CIA Landlord said,

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

Before taking your first step into the property ladder, we recommend you consider all the required costs involved and ensure you invest in an area that will be profitable for you in the long-term future.”