More than a third (36%) of landlords are looking to cut their annual spend owing to rising running costs and higher taxes, research by lender Kent Reliance has found.
The average landlord spends £3,571 per property in annual running costs before tax or mortgage interest, which equates to 32.9% of their rental income.
These costs have risen by 5.6% in the past two years. And that’s before you factor in the reduction in mortgage interest tax relief and the 3% stamp duty surcharge, affecting new investment purchases.
Kent Reliance estimated that landlords collectively contribute £16.1bn to the British economy through spending, up from £8.5bn a decade ago.
Adrian Moloney, sales director of OneSavings Bank, Kent Reliance’s parent, said: “The political discourse around the private rented sector has been one-sided to say the least.
“Overlooked is the significant economic contribution landlords make, supporting thousands of jobs through their spending and housing a large portion of the country’s workforce.
“Instead, landlords have faced punitive tax and regulatory changes, at a time when running costs are climbing.
“Policies that increase the cost and complexity of being a landlord don’t benefit tenants; quite the opposite. Property investors will seek to protect their business’s margins, whether cutting their spending on elements like property maintenance and improvement, or raising rents.
“The recent reforms are also deterring new investment, especially from amateur landlords. This does little to tackle the housing market’s chronic undersupply of property.”
Property upkeep and maintenance (46%), and property improvement (38%) were the two most popular areas identified by landlords for potential cost cutting.
Meanwhile 29% hope to cut their outlay on mortgage interest payments. A quarter (24%) targeted letting agent fees.
Worryingly for tenants one in five landlords plan to increase rents to cover the higher costs faced.
Taking taxes out of the equation, landlords typically spend money on the following: £1,086 on maintenance, repairs and servicing, £935 on letting agent fees per property, £426 per property each year in ground rents and service charges, £149 on insurance, £107 on legal and accountancy fees £107, and £64 on administrative and license fees. A further £528 is lost in void periods each year, a figure that has increased in the past few years.