Landlords plan to ditch letting agents and self-manage

More than half of landlords using a letting agent expect to take on management themselves within two years, including the associated compliance work, research reveals.

The August Landlord Survey found that 58% of those currently using an agent say they are likely to manage all their properties themselves.

Among landlords who pay or have paid for management, 58% report fees of at least 11% of rent.

For someone with five properties each bringing in £1,000 a month, a 12% management fee amounts to £7,200 a year.

Landlord compliance workload

The firm’s chief executive, Richard Samuel, 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 landlords can put a number on, and it is days, not minutes.”

He added: “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.”

Letting agent changes

Almost two-thirds (65%) of the 276 landlord respondents have changed their management arrangements in the past two years.

While 27% have left an agent to manage their properties themselves, 26% have moved in the opposite direction and started using one.

Compliance and legal complexity were the most common reasons for changing arrangements, ahead of wanting more control, poor service and fees.

Across the survey, 69% of landlords say they are likely to be managing all their properties themselves within two years.

Digital tax reporting

Among landlords within the scope of Making Tax Digital, three-quarters expect each quarterly update to require at least four extra hours.

Four to eight hours per update was the expectation for 41%, which is equivalent to 16 to 32 hours across a year’s quarterly submissions.

A further 34% expect each update to take more than a working day.