Almost a quarter of UK landlords have considered leaving the rental market altogether, as Making Tax Digital (MTD) piles on administrative and compliance pressure, according to new research from Landlord Studio.
Despite this, 74% of landlords agree that MTD is actually making it easier to manage their tax, and over half (55%) still expect MTD to increase their profitability overall. The findings also point to a growing role for letting agents, with 90% of landlords agreeing that agents are well-equipped to help them manage MTD requirements.
MTD for Income Tax has been mandatory since April 2026 for landlords earning over £50,000 in qualifying income, requiring quarterly digital updates to HMRC alongside an end-of-year finalisation process. The threshold drops further to £30,000 from April 2027, bringing a second wave of landlords into scope within the next year.
The confidence paradox
While confidence in MTD is high, many landlords are still feeling the strain of rising admin demands. Despite 94% of landlords and letting agents combined saying they are confident in their understanding of MTD requirements, and 95% confident in their ability to implement it, 59% of landlords specifically remain concerned about making mistakes or facing penalties.
Letting agents appear well placed to help close this gap, with 51% describing themselves as very confident in their understanding of MTD, compared with just 36% of landlords. This suggests agents can help bridge the divide between broad landlord confidence and the practical realities of staying compliant.
Logan Ransley, co-founder of Landlord Studio, believes the pressure is now serious enough to affect landlords' long-term plans. "Landlords are clearly feeling the pressure of MTD, both in terms of time and cost, and for some that pressure is serious enough to make them question whether continuing to let property is worth it," he says.
"What's clear is that the support landlords need is often already there. Letting agents have the knowledge and the relationships to make a real difference, but our research shows many landlords simply don't know how much help is on offer. Closing this gap is going to be essential as MTD rolls out more broadly."
The race to stay compliant is borne out in the numbers. Landlords now spend an average of 13 hours a month, more than a day and a half of work, managing tax and financial admin. Compared with 12 months ago, 53% say both the time and cost associated with this have increased. On average, landlords estimate that the time they spend on tax and financial admin is worth more than £3,000 a year, almost £64 a week.
The admin burden isn't only being felt by landlords. 89% say rising admin and compliance costs make them likely to raise rents, showing the knock-on effect inefficient back-office processes can have across the rental market.
Falling behind on technology
The research suggests that while landlords broadly recognise the benefits of digital tax reporting, many are still grappling with having the right tools to manage compliance efficiently. Just 34% use software or digital platforms for tax reporting and record-keeping, while 39% continue to rely on spreadsheets or manual methods.
Spreadsheets are technically permitted under MTD, but only with separate bridging software and strict digital links in place, an extra layer of complexity many landlords may not have accounted for.
A growing opportunity for agents
Landlords identified the biggest compliance challenges as:
- keeping accurate records (38%)
- the risk of errors and penalties (36%)
- the time required for admin (34%)
They also recognise that letting agents are well-equipped to help them manage new tax requirements (90%), but with 61% of letting agents themselves admitting that awareness of the support they can offer remains low, there is a clear opportunity to close that gap. Letting agents have the ability to provide landlords with practical support, helping them improve processes, stay organised and reduce the risk of mistakes.
There is also strong future demand for digital solutions, with 98% of landlords saying they are likely to invest in tax and compliance software over the next two years, and 44% looking for greater financial visibility.
For letting agents, this creates an opportunity to combine their expertise with digital tools, helping landlords stay compliant, reduce admin and manage rental income more efficiently as MTD implementation accelerates.
"Letting agents already hold the rent, expense and ownership data their landlords need to comply with MTD, what's been missing is a way to get that data to HMRC without anyone re-entering it by hand," Ransley adds.
"That's exactly why we built Nexus by Landlord Studio. It connects the records an agency already keeps to a secure portal where landlords, or their accountants, can review and submit each quarter.
"Nexus is available exclusively through participating letting agents, so an agent's relationship with their landlords becomes a genuine value-add rather than another compliance headache."
