Why Letting Agents Must Act Now: Protecting Businesses Amid the Landlord Exodus

The UK’s private rented sector is facing an unprecedented crisis, and letting agents are feeling the impact more than ever. Landlords are leaving the market in droves, driven by relentless tax changes that have made it harder and more expensive to keep their properties profitable. For letting agents, this exodus represents a real threat to their survival, with fewer properties to manage and fewer landlords to serve. But there is a solution—one that requires letting agents to rally behind efforts to support landlords and push for meaningful tax reform.

The Growing Risk of a Landlord Exodus

In recent years, the UK government has introduced a series of tax reforms aimed squarely at landlords. From the phased reduction of mortgage interest relief under Section 24 to tighter regulations on buy-to-let lending, landlords have seen their profits eroded and their tax bills rise. Faced with diminishing returns and an uncertain future, many landlords are choosing to sell their properties rather than continue renting them out. The knock-on effect for letting agents is profound: fewer landlords mean fewer properties to let, leading to reduced revenue for agents who rely on managing those homes.

Tax Treatment of Landlords: The Real Cause

Letting agents and their professional bodies have been increasingly vocal about the impact of these tax changes, but while they are right to campaign against these damaging policies, they may not fully realise that one of the most effective solutions for landlords is being obstructed. The tax treatment of landlords is at the heart of the problem, and without reform, the exodus of landlords will continue, placing letting agents in an ever-more precarious position.

Incorporation: The Solution Landlords Need

For many landlords, incorporating their property business into a limited company is a way to manage their tax burdens more effectively. Incorporation offers several advantages, including potentially more favourable tax outcomes on rental income. However, in recent years, HMRC has created obstacles that prevent many landlords from taking full advantage of this option. Without the ability to incorporate smoothly, landlords are left with fewer ways to protect their rental income from rising tax liabilities, leading to more exits from the sector.

HMRC’s Role in This Crisis

HMRC’s current stance on landlord incorporation has created a significant barrier. In the past, landlords were able to move their properties into limited companies without triggering hefty tax bills or facing major financial hurdles, but recent actions by HMRC have made this process much more difficult. While the technical details of incorporation may seem far removed from the day-to-day concerns of letting agents, the reality is that unless landlords are given the tools to manage their tax liabilities, they will continue to leave the sector. Letting agents need to be aware that HMRC’s approach is accelerating this trend, and it’s their own businesses that will ultimately pay the price.

A Call to Action: Letting Agents Must Protect Their Own Interests

Letting agents now face a critical choice: stand by as landlords continue to exit the market, or take action to support the campaigns calling for fairer tax treatment of landlords. Organisations such as the Chartered Institute of Taxation (CIOT) and Property118 are already leading the charge, lobbying HMRC to provide clearer guidance and better support for landlords who want to incorporate. By backing these campaigns, letting agents can help influence the future of the private rented sector and protect their own livelihoods.

The Risks of Inaction

The risks of inaction could be devastating for letting agents. Every landlord who exits the market represents lost business, and as the supply of rental properties continues to shrink, so too will the demand for letting agents’ services. By supporting calls for tax reform and fair treatment of landlords, letting agents can help stem the tide of landlord exits and secure the future of their businesses.

Protecting the Future of Letting Agents

Letting agents and landlords are two sides of the same coin. The future success of letting agents depends on a thriving private rented sector, which is currently being threatened by punitive tax measures. Without meaningful change, landlords will continue to leave, and letting agents will bear the brunt of this loss. Now is the time for letting agents to act—to support representations from CIOT and Property118 and to ensure that the private rented sector remains viable for landlords, letting agents, and tenants alike.

Call to Action: Share and Support

Letting agents, landlords, and professional bodies within the industry are encouraged to share this article with their networks, including letting industry publishers, landlords, and industry associations. Raising awareness of the issue is crucial to making sure HMRC and government policymakers understand the urgency of the situation.

Running a campaign of this nature is costly and requires significant resources. Property118 has long been at the forefront of fighting for the rights of landlords and supporting the private rented sector, but we need your help to continue this important work. Please consider supporting the Property118 JustGiving campaign to fund ongoing efforts to lobby for fair tax treatment and protect the future of the UK rental market.

To make a donation, visit our JustGiving page. Every contribution helps us fight back and defend the rights of landlords and letting agents across the UK.

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