Nearly half of landlords may drop letting agents

UKALA claims April tax hike will persuade many landlords to self manage

Forty seven percent of the 1.1 million landlords who use letting agents say they would self-manage their properties if their profits begin to fall following the taxation changes due to kick in next year.

From April next year tax relief available to landlords is being gradually reduced for higher and additional rate taxpayers and will only be available at the basic rate from 2020.

This means for example that a 40% tax payer who currently pays £1,680 tax on a rental income of 15,000 will pay £6,000 in tax in four years’ time.

Richard Price UKALA landlords“A significant number of landlords will be hit hard by the tax changes and agents’ fees will be one of the items underneath the magnifying glass if profits begin to decrease,” says Richard Price,

Executive Director of the The UK Association of Letting Agents (UKALA), which carried out the research.

It asked 900 investors about the tax changes during a survey in September to assess the impact the extra tax burden might have on letting agents’ businesses.

The findings were highly variable depending on where the landlords were operating. For example, 56% of Scottish agents canvassed said they would ditch their agent if profits were squeezed, while only 29% of West Midlands landlords would do so.

UKALA’s research shows that the landlords most likely to eschew their letting agent are those who use them intermittently. Only 26% of those who regularly employ full-service agents who let them go, and only 21% of those who use them on a let-only basis would do so.

“As landlords’ costs inevitably rise, agents will need to do more to position themselves as indispensable, and make it obvious that they provide solid value for money,” says Price. “Otherwise, as future tenancies come to an end, landlords will either shop around or start to consider self-managing their properties.”

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