Could a fall in landlords’ profits stop them using letting agents?

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New tax benefit changes that come into force next year could reduce landlord’s profits, according to figures given in a December 2016 article.

One way to cut landlords’ costs is to stop using letting agents, who charge landlords a fee for their services.

Next year, the tax relief on the interest paid by landlords on commercial mortgages will be reduced and this will make buy-to-let investments less profitable.

Research by the UK Association of Letting Agents (UKALA) looked at the impact of the tax changes on landlords. The organisation claims that 400,000 landlords will go up a tax bracket and have to pay more.

Over half (57%) of landlords presently use a letting agent. The UKALA said that 47% of those currently using one are considering stopping to save costs. Scottish landlords are particular bullish about this, with 56% saying they will stop using agents, but in the West Midlands the figure is 29%, which is the lowest in the UK.

The executive director of the UKALA, Richard Price, 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.”

He stressed that letting agents provide “solid value for money”, although he fears that unless landlords are convinced of the value of letting agents, they will resort to managing their own properties.

He claimed, however, that most landlords are not in a position to provide a service to the same standards and professionalism of letting agents.

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