Are you a landlord selling up? How online estate agents can help your margins

It’s a difficult time to be a landlord. Increased red tape, fewer tax breaks and growing economic uncertainty means the buy-to-let bubble – which once offered lucrative financial gains for property investors – is on its way to bursting (or at the very least, deflating). One of the biggest changes faced by landlords in recent times is the so-called ‘landlord tax’. Until now, landlords could deduct mortgage interest and other finance-related costs from their rental income before calculating their tax liability.

Since April 2017, though, that tax relief is being tapered down from 100% to zero. Instead, landlords will be granted a tax credit worth 20% of the mortgage interest cost to offset against income tax.


The implications of this are significant, with many landlords fearing the changes will push them into the higher income tax bracket.

For example, imagine a basic rate taxpayer lets out a property for £15,000 a year on an interest-only mortgage costing £10,800 per year. Under the previous system, their rental income was judged to be £4,200 because they were able to deduct that mortgage interest before declaring their taxable income. Since the law change, however, the same landlord is eventually will be judged to have income from the property of £15,000.

If that buy-to-let landlord had a job with a salary of £35,000, under the existing system they would remain a basic rate taxpayer with total income of £39,200, but under the new system they would be a higher rate taxpayer judged to have total income of £50,000.

According to mortgage broker John Charcol, because of this alone some could see their annual net profits fall by up to 84%.

There’s also been an surcharge on Stamp Duty of 3% for buyers of second (or more) properties, driving up the bill on a £300,000 property from £5,000 to £14,000 – plus the rules allowing landlords to claim a 10% tax break for ‘wear and tear’ have been scrapped and replaced with a typically less lucrative deal.

And let’s not forget that landlords pay an even higher rate of capital gains tax when selling a property.

But it doesn’t end there: interest rates can’t stay as low as they currently are forever; Brexit has put a huge question mark over the country’s economic future; tougher immigration laws mean there’s less demand for housing; and getting a buy-to-let mortgage in the first place is becoming increasingly difficult.

In fact, a report from Moneyfacts shows the number of available buy-to-let mortgages has recently fallen from 1,482 to 1,408, in part due to the introduction of tighter Bank of England rules requiring lenders to apply new affordability tests based on hypothetical interest rates of up to 5.5 per cent.

As rents should now make up as much as £140 for every £100 of mortgage interest, up from £125 previously, landlords have no choice but to take out smaller loans (requiring bigger deposits) or pass the cost on to their tenants.

In the face of these financial obstacles, it’s no surprise so many landlords are choosing to sell part, or even all, of their portfolio, making profit margins more important than ever.

How can landlords improve margins when selling?


An online estate agent is a great way to sell your property quickly, for a great market price, with the least hassle and – crucially – minimal costs involved.

Traditional estate agents charge a typical fee of 1.5% plus VAT, while online estate agent costs typically vary from £250 to £785 – that’s a fixed, VAT-inclusive fee. This could mean a decent saving of £2,815-£3,350 for a property sold for £200,000, or a huge saving of £17,215 – £17,740 for a property sold for £1m.

The savings that could be had are substantial. Plus, landlords wanting to sell more than one property could also benefit from a multi-property discount, meaning you could save even more.

As landlords know, buy-to-let is a business, which means you expect a business-focused service when it comes to the estate agent you choose to sell your property. Compared to traditional estate agents, online estate agents allow you to really maximise their services to fit into your own business style.

For a start, all communications take place online. That means instant service when it suits you – no juggling physical appointments with local branches. Plus, you can customise the service to get the features you really need. At the most basic level, all online estate agents offer advertising through Rightmove, which gives your property that all-important market exposure.

However, while many give you the reins when it comes to meeting would-be buyers and conducting property viewings (after all, no-one knows the property better that you), some also offer a viewings service, where they’ll take care of that element for you, which is helpful if you live far away from your property, or simply don’t have the time to do them yourself. And again, for a fixed, VAT-inclusive fee, you can keep on top of this expenditure without worrying about the surprise bills and fees you’d get from a traditional agent.

Online estate agents make perfect business sense for landlords looking to sell in this difficult economic climate. Check out our comparison tool to find the right agent for your needs.