Landlords contribute £15.9 billion per year to the British economy, according to Kent Reliance, however this figure could decline as their tax burden increases.
The figure was calculated as UK landlords’ total pre tax spending on running their portfolios. This has more than doubled from an estimated 7.1 billion in 2007 as the private rental sector has rapidly expanded and property costs have risen. This expenditure is said to support thousands of jobs in related sectors, from tradesmen to letting agents.
The cost of property upkeep, maintenance, and servicing were found to be the largest outlay at £5.5 billion. Landlords also spend £2 billion in service charges and ground rent, £963 million on insurance, £904 million on utilities, and £1.1 billion on other associated costs.
The average spending on letting agents’ fees came to £4.7 billion each year, whilst £644 million was spent spent on legal and accountancy fees and another £218 million on administration costs. This adds up to £5.5 billion of revenue for these sectors generated by landlords.
It was also found that costs per property are up 25 per cent since 2007, with the average landlord now spending £3,632 per year in running costs, before tax or mortgage interest. This amounts to a third of rental income. The figure breaks down to £1,025 spent on maintenance, repairs and servicing, with £870 spent on letting agent fees per property.
However, rising costs and higher tax bills are leading to landlords making plants to reduce their spending, whilst one in five are looking to raise rents in order to glean back some profit.
17 per cent claimed that they would try to cut costs on property upkeep and maintenance, with letting agent fees and mortgage costs each cited as target areas for 10 per cent of landlords. The research report suggests that this will have a detrimental effect on industries and jobs that depend on landlords for revenues.
Sales and marketing director of OneSavings Bank, John Eastgate, said: ‘Landlords may seem like an easy target for political point scoring, but they play a vital role in the economy. Not only do they house a huge proportion of the country’s workforce, bridging the housing demand and supply gap, their spending supports thousands of jobs whether builders, cleaners, lawyers and accountants or letting agents. Trying to tackle the housing crisis by targeting landlords with punitive taxes is very simple and politically highly palatable, but has unintended consequences. Either it means less work for all those who support the property industry, or it means tenants will have to foot the bill for the government’s tax raid, or both.’