Landlords collectively contribute £16.1bn to the British economy through spending, nearly double the £8.5bn from a decade ago, but more than a third are looking to cut this as rising running costs and higher taxes bite.
The latest research from Kent Reliance found the average landlord now spends £3,571 per property in annual running costs, before tax or mortgage interest, equivalent to 32.9 per cent of rental income. That has jumped 5.6 per cent in the past two years.
Around £1,086 is currently spent on maintenance, repairs and servicing, and £935 spent on letting agent fees per property.
A typical landlord spends £426 per property each year in ground rents and service charges. Insurance typically costs £149, and legal and accountancy fees £107, while administrative and license fees add another £64 per year.
The research also revealed that a further £528 is lost in void periods each year, a figure that has climbed in recent years as a result of higher rents, and a slightly longer gaps between tenancies.
Landlords seek to slash spending
The report found that a typical landlord reviewing their outlay would cut spending per property by around six per cent. If replicated across the private rental sector, this would reduce their total spending by nearly £1bn each year.
Property upkeep and maintenance, and property improvement were the two most popular areas identified by landlords for potential cost cutting, standing at 46 and 38 per cent respectively. Around 29 per cent hope to cut their outlay on mortgage interest payments.
One in five landlords plan to increase rents to cover the higher costs they face.
Policies increasing costs and complexity do not benefit tenants
Adrian Moloney, sales director of Kent Reliance’s parent business OneSavings Bank (pictured), said that 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.”