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One third of landlords plan to cut annual spending

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More than a third of landlords are looking to cut spending levels as a result of rising costs and higher taxes.

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. This equates to 32.9% of rental income, represeting a 5.6% rise over the past two years.

Around £1,086 is currently spent on maintenance, repairs and servicing, while £935 goes towards letting agent fees.

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.

Slashing costs

The report found that a typical landlord is reviewing their outlay and is looking to cut spending per property by around 6%. If replicated across the private rental sector, this would reduce their total spending by close to £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% respectively. Around 29% hope to cut their outlay on mortgage interest payments.

Meanwhile, one in five landlords plan to increase rents to cover the higher costs they face.

Adrian Moloney, sales director of Kent Reliance’s parent OneSavings Bank, said the political discourse surrounding the private rented sector has been one-sided.

“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.”

He added that the recent reforms are also deterring landloards from making new investments, which is not helping the housing market’s chronic undersupply of property.