Online letting agent Upad has warned landlords to watch out for traditional high street agents who increase their fees to them in a bid to recoup lost revenues following the fees ban.
“Landlords should look at ways to negotiate with their letting agent and be vigilant to agents trying to increase their commission or other fees, as they look to flesh out their profits following the ban on tenancy fees,” he says.
The warning comes from Upad’s CEO James Davis (pictured, left), whose company has also published research today that shows a fifth of all landlords are likely to increase their rents to recoup the extra taxation they will have to pay this year as the new Section 24 rules kick in.
The National Landlords Association has already highlighted how over half of all landlords will be pushed into a higher tax rate by the new rules.
These rules, the first wave of which were introduced on April 6th this year, reduce the tax allowances landlords have been enjoying.
The research also calculated that 13% more of landlords’ profits will not be taxed over the next 12 months as the new rules take effect.
How much relief landlords can claim for the costs of their mortgage and overdraft interest and other property finance is to be gradually reduced until 2020, when it will disappear entirely.
Out of pocket
“Despite the changes being gradually introduced over the next four years, our latest research shows already how out of pocket landlords are set to be by 2018/19 alone, as they see a big rise in their tax bills and a substantial hit to their profits,” says James Davis, CEO of Upad.co.uk.
“Those who are in the higher rate tax bracket of 40% will be the worst affected but others could find themselves being tipped into the higher tax bracket despite their income not having increased, which will leave many renting at a loss and subsidising their property every month.”