Landlords reveal main reasons for using letting agents
Growing compliance is driving more landlords to agents but many continue to self-manage, research by August has revealed.
Compliance has been named as the main reason why landlords are turning to lettings agents.
The findings came from research by landlord property management firm August, which assessed the mood of landlords in the scope of 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.
The Government has been adding obligations to landlords for a decade without anyone tracking the hours.”
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%.
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
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 (pictured), 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.”
