Editor's note: This brief was summarised by The Property AI Team from a report by The Negotiator. Read the original article for full details.
Compliance tops landlord concerns
Compliance is the main reason landlords turn to lettings agents, according to research by landlord property management firm August. The findings assessed landlord sentiment around Making Tax Digital reporting requirements.
The survey found that two thirds of landlords have changed their management arrangements in the past two years. A quarter have left a letting agent and now self-manage, 26% have started using an agent and 12% have switched agent.
Asked why, the most common reason was compliance and legal complexity, at 27%, ahead of wanting more control at 22%, poor service at 20%, and the cost of fees at 14%.
Cost of management
That cost is substantial. Among landlords who pay or have paid for management, 58% pay 11% of rent or more, and nearly one in ten pay more than 15%. On five properties letting at £1,000 a month, a 12% management fee is £7,200 a year.
Yet 69% of landlords say they are likely to be self-managing all their properties within two years, including 58% of those who currently use an agent.
Time burdens of Making Tax Digital
Landlords were also asked how much extra time each quarterly update takes for Making Tax Digital. Three-quarters expect at least four hours, 41% expect four to eight hours and a third, at 34%, expect more than a day. Only 6% expect less than an hour. Across four quarterly updates, that is 16 to 32 hours a year for most landlords in scope, and more than 32 hours for a third of them.
The research found that legislation is landlords’ single biggest worry in the next 12 months at 26%, ahead of void periods at 19%, mortgage rates at 19% and tax at 13%. Only 2% say nothing in particular worries them.
Richard Samuel, Chief Executive of August, says: “The Government has been adding obligations to landlords for a decade without anyone tracking the hours.
“Quarterly digital tax reporting is the first one landlords can put a number on, and it is days, not minutes. Add the new database, the ombudsman, periodic tenancies and the paperwork around every rent increase, and the small landlord is now running a compliance function with no staff.
“Some will pay an agent, some will leave, and the rest need tools that do most of this for them. That is what the next few years of the sector look like.”
Source: The Negotiator