The hidden costs of property investment in Manchester

Making the decision to become a property investor can be a tricky one, but with our expert guidance and support, you can be confident in your decision. In this blog, we’re looking into the hidden costs of property investment in Manchester.

Manchester City Centre and the surrounding areas have been growing in popularity for many years. This is set to continue as fewer people decide to reside in the capital, London. More people are looking for more affordable alternatives that still offer the city lifestyle, which Manchester does.

More and more groups of people are choosing to make the change, including families, students and young professionals, which offers great opportunities for property investors.

Is now a good time to invest?

Yes, now is an excellent time to invest, especially in Manchester. While many groups of people are struggling to get onto the housing ladder, they are having to rent for longer. This means that more and more people are seeking rental properties, helping to keep rental demand steady.

As property managers in Manchester, we have a bank of pre-vetted tenants who are waiting for properties to be marketed with us. This only highlights the need for more rental properties in the area. It also means that if you let your property with a high-quality agency like ours, it’s unlikely to be empty for very long. We can advise you on how best to invest in Manchester.

How much is a Manchester buy-to-let?

House prices are rising across the country for various reasons, so it’s important to look into these before you decide to invest.

The exact price for an investment property will depend on many factors, from its location and property type to its size and quality. In Manchester, homes typically range from £205,000 to £456,000, with terraced houses falling on the lower side of the budget.

Some areas of Manchester have been identified as high-performing, whether that be for their rental yields or their capital growth. Fallowfield and Chorlton are popular, along with the city centre, where the Manchester rental market is thriving.

The many universities in Manchester bring in a younger crowd, who are likely to want to live closer to the centre and may choose to reside in apartments rather than houses. A student property investment is a great idea with the University of Manchester and the Manchester Metropolitan University nearby.

Landlords can expect average rental yields of between 3.4% and 10.6%. Look into areas with high rental yields in the North West.

What costs do I need to consider with property investment in Manchester?

Property investment is a big decision, so it’s crucial that you have all of the information you need before you start the process. We recommend talking to a dedicated letting agency and a financial advisor before you get started. Here are some costs you will need to consider.

Property prices

You will need to decide how best to pay for the property - whether you will pay via cash, mortgage or another way. You will also need the money to cover the house deposit. Look into the UK property market, specifically the Manchester property market, for average property prices.

Stamp duty

Stamp duty changes come into force at the end of March 2025, so it’s important that you are aware of these. The rates are changing based on additional properties, which means you may end up paying more money for stamp duty land tax.

Legal fees

When you purchase a property, you will need to do so through a solicitor. They will organise legal documentation and ensure everything is completed correctly.

Home renovations

You may need to complete some home renovations on the property you buy. It’s important to have a good idea of how much these will cost before you commit to the property; otherwise, it can be quite stressful to deal with.

Mortgage payments

Before you agree to a mortgage, you must ensure that the rental costs will cover the fees. Otherwise, you will find yourself out of pocket and in a stressful situation. A great property management company in Manchester will assess the average monthly rental costs in the area and help you come up with a suitable figure to charge. Read our blog on how much money you need to invest in a property.

Property management company fees

Property management companies are a great investment if they understand your requirements and support you correctly. Unfortunately, we’ve had many landlords come to us after poor experiences with property managers.

Thankfully, Parello is on hand to ensure that your property and tenants are looked after without you needing to lift a finger. We always guarantee a professional approach and take care of any issues promptly.

Most property managers will charge a percentage of the monthly rent to cover their fees. Make sure you know exactly what’s included before you sign up to work with them. Read our blog on the typical costs of property management fees.

There may be other costs that you are required to pay, such as rental income tax.

What are the hidden costs of property investment?

Here are some of the more hidden costs associated with investment properties.

Property maintenance

When managing an investment property, you have to be ready for emergencies. It’s good to put money aside each month to cover any emergencies that occur. You should also ensure that your tenants know how to report maintenance issues so they can be rectified sooner.

Periods with no tenants

If you choose to organise the property yourself without a property management company, or you choose a low-quality company, there is a risk that your property will be empty for prolonged periods of time.

In contrast, we have a range of tenants who are waiting for their ideal property to reach the market, meaning that there’s a high chance someone will be interested. We take a proactive approach to finding tenants and keep details on record so we can keep them updated with properties that meet their brief.

Additional costs can include valuation fees, survey costs and conveyancing fees, all of which are vital when purchasing a property.

Generally speaking, you can avoid many of these hidden charges by working alongside a high-quality property management agency. At Parello, we have a professional, dedicated team who are ready to manage your investment property in Manchester. Contact us today to see how we can help.

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