A quarter of landlords would look to cut out letting agents to reduce the ever-rising taxes and running costs of their buy-to-let portfolio, new research claims.
A survey by Kent Reliance found that the average landlord now spends £3,571 per property on annual running costs, before tax or mortgage interest.
Landlords spent most on property maintenance at £1,086, followed by letting agents’ fees at £935.
Landlords said they would review all their costs, with some hoping to achieve savings of 30%.
The report warns that lettings charges could increase further once the tenant fee ban is introduced in June, adding that this may result in landlords either shopping around or self-managing.
It says: “Rather than see revenues fall, many letting agents may pass the costs on to landlords, who in turn will seek to recover their higher outlay from tenants in the form of higher rents where demand allows.
“It’s unlikely to make renting more affordable, simply turning an upfront cost into a higher ongoing monthly cost for many tenants.”
Almost half (46%) of landlords said they would reduce the amount they spend on property upkeep and maintenance to manage their costs, while one in five said they planned to increase rents.
Cumulatively across the private rental sector, landlords contribute a total of £16.1bn to the British economy through their spending, supporting thousands of jobs from builders and tradesmen through to accountants and letting agents, according to the report.
Adrian Moloney, sales director of Kent Reliance parent company OneSavings Bank, said: “Policies that increase the cost and complexity of being a landlord don’t benefit tenants – quite the opposite.
“Property investors will seek to protect their business’s margins, whether cutting their spending on elements like property maintenance and improvement, or raising rents.
“The recent reforms are also deterring new investment, especially from amateur landlords. This does little to tackle the housing market’s chronic undersupply of property.
“Further intervention could prove counterproductive with many landlords still coming to terms with change.
“A heavy-handed version of rent control that prevents them from absorbing rising costs, for instance, could prove to be a tipping point leading to a dwindling supply of rental homes. However, there is a real opportunity to align longer-term tenancies to fixed-term mortgage products.
“This would not only provide stability within the sector but provide a platform for the private rental sector and the government to work together to create a more positive outcome in the social housing debate.”
Comments (9)
What were the figures EYE posted the other month on market share of landlords with one or two properties …. Is this story misleading and piling on the scare mongering? We have seen an increase in landlords wanting management because of the shed load of things they now have to do and the majority in the market are for a better word “amateur landlords” and not buy-to-let portfolio. Those that are selling up, is because they have had enough.
Spot on David. The small Landlord is purposely being phased/driven out over the next t decade. This is almost common knowledge in higher political circles.
I’m not usually a believer in conspiracy theories but I think the whole idea at the moment is to stamp out the small landlord with 1 or 2 properties in their pension focused portfolio and to stamp out small independent letting agents so that the people who know best ie housing associations, build to rent developers and the like, can take control and be more easily managed and controlled by government.
Agreed (in part!), however this is not so much about Govt. control of the sector, it is about institutional investors/banks/insurance firms desire to ‘tap’ in to a very lucrative rented sector- at the cost of small-holder Landlords and Tenants, in the long term.
There is another story on PIE this morning (which seems to have attracted minimal attention from PIE readers), which is quite telling as to where the PRS is going, and how it will be handled. Quintain (a build-to-rent developer, has invested in Movebubble, and Movebubble are set to launch an app aimed squarely at institutional investor backed, build-to-rent firms). This is, IMHO an indicator that Agents in their current form, will only occupy certain niches within the market (if having any place at all), until the inevitability of build-to-rent firms eventually absorbing all marketing, servicing, maiantenance and administrative processes in-house.
Sadly, as far as the PRS is concerned…The writing is on the wall for both Landlords, and Agents and innumerable industry linked businesses (Inventory Clerks, cleaners, Energy Assessors etc.).
Given the already levels of landlord bashing by the conservative government ANY form of rent control will have a major impact and confirm to landlords they are not wanted. Like the 1977 Rent Act it will cause immeasurable damage but this time there will be no council housing. The suggestion by Kent reliance that any form of rent control is acceptable is worrying. Shelter generation rant and the likes are causing more harm to tenants than good but the damage is unseen and turned on landlords as they take the necessary actions to protect their investments. Clever but the damage resulting in rents increasing just looks like landlords are greedy. The loss of available rental properties might eventually bring the realisation that landlord bashing is not the solution to the housing problem.
I think the only form of rent control that should be allowed is a maximum annual increase of 10% of the rent, or in line with inflation whichever is highest. Tenants aren’t daft, if they feel the increase is too high then they will look for another property and hand in notice.
I know I’m a relic but remember my mortgage at 15.25% and inflation over 10%. Earning around £5000 pa. rent control meant rents at £7.00 to £12.00 per week. A typical minor roof repair between £20 & £30. It hard to imagine these interest rates now. Then 10% increase could have been below inflation! Sorry for the history lesson but if Corbiyn the com has his way those days could return for landlords. History has a habit of repeating itself! Ps these figures were for Greenwich Blackheath SE Londo
Whilst running a training course for landlords this week in Wales I met 2 landlords who had opted to save money by not using agents. Both were being prosecuted for themselves not being licensed. In the end that decision cost them more than they saved !
it is no longer a place for hobby landlords but those with a small portfolio may choose to Bring themselves up to speed with the laws and regulations and self manage. The fees ban will impact on agency businesses without doubt.