Shift comes as landlords reconsider compliance
Compliance is now the top reason landlords change how they manage their property, with two-thirds (65%) of landlords having changed their management arrangements in the last two years, according to August’s Landlord Survey.
It found that 27% had left a letting agent and now self-manage, while a similar amount (26%) had taken one on. 12% have switched agents. Compliance and legal complexity was the most common reason (27%) for such changes, ahead of wanting more control (22%), poor service (20%) and fees (14%).
Those fees are high. Of those paying 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.
However, more than two-thirds (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.
New compliance responsibilities
Compliance complexity has increased thanks to the Renters’ Rights Act and Making Tax Digital, the second deadline for which was at the weekend. The report found that three-quarters (75%) of landlords in scope for MTD expect it to take at least four extra hours a quarter, 41% expect four to eight hours and a third (34%) expect more than a day. Only 6% expect it to take them less than an hour.
August points out that across the four quarterly updates required by the new system, that totals 16 to 32 hours a year for most landlords in scope, and more than 32 hours for a third of them.
Other compliance worries include void periods (19%), mortgage rates (19%) and tax (13%). Only 2% say nothing in particular worries them.
Richard Samuel, chief executive of August, said: “Government has been adding obligations to landlords for a decade without anyone adding up the hours. Quarterly digital tax reporting is the first one that 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.”
