Nearly half of all landlords plan to ditch plan to get rid of their letting agents if profits drop once tax relief is cut back next year, a survey revealed.
A poll of UK landlords, conducted by National Landlords Association, found that 47% of landlords are prepared to ditch their current letting agents from next year after they begin to see tax relief being pulled back by landlords.
The staged removal of tax relief over the next four years has been widely discussed, with many experts warning that investors will have to increase rents to cover their rise in costs.
Recently, the NLA stated that 26% of landlords (those who use a letting agency to manage their property portfolio) would get rid of them to secure profits.
An additional 21% of landlords (those using agents on a let-only basis for their portfolio) would also lose them.
Only 36% of landlord would continue their relationship with their letting agent even if costs were to increase for them.
This is another blow to estate agents after the Chancellor had already banned tenancy fees in last month’s Autumn Statement.
A quick knee-jerk reaction at the time was the landlord association’s statement saying that agents would then have to shift costs onto landlords who would then, in return, shift those costs onto tenants.
Richard Lambert, chief executive at the NLA, said: “Landlords should already be looking ahead to the forthcoming tax changes and working out how they will be able to maintain profitability. That will intensify with the prospect of agents’ fees increasing as a result of the ban on charging tenants.”
He warned against abandoning letting agents altogether however, adding: “While it may seem an appealing proposition to minimise your outgoings, the majority of landlords simply won’t have the resources to deliver a service that meets the standards or professionalism that their agent currently provides.”
Across the UK, 57% of landlords (approx. 1.1mil) use the services of letting agents, with 36% of them being regular users and 21% using services occasionally.
Richard Price, executive director of the UK Association of Letting Agents, said: “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.”
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. Otherwise, as future tenancies come to an end, landlords will either shop around or start to consider self-managing their properties.”
