New research suggests that almost a quarter of landlords have considered leaving the private rented sector (PRS), with Making Tax Digital (MTD) adding to a wider range of administrative and regulatory pressures facing the sector.

The survey, commissioned by property accounting and compliance software company Landlord Studio, found that at a time when landlords are already managing other pressures such as higher costs of living and the impact of the Renters Rights’ Act, 22% of landlords have thought about exiting the market. The findings come just months after MTD for Income Tax became mandatory for landlords with qualifying income above £50,000. And from April 2027, the threshold will reduce to £30,000, bringing thousands more landlords into scope.

While the Government says MTD is designed to modernise the tax system, reduce errors and make tax administration more efficient, the research suggests many landlords remain concerned about the practical realities of quarterly reporting and digital record keeping.

Time and costs increasing

The study found that landlords now spend an average of 13.6 hours each month dealing with tax and financial administration, with respondents estimating that time to be worth about £3,311 a year. More than half (53%) said both the time spent on tax administration and the associated costs have increased over the past 12 months.

The additional compliance burden could also have implications for tenants. Almost nine in ten landlords (89%) said rising administrative and compliance costs make them more likely to increase rents.

Confidence tempered by concerns

Although awareness of MTD appears to be high, confidence in remaining compliant is less certain.

While 94% of landlords surveyed understand the requirements of MTD and 95% believe they are capable of implementing the changes, 59% admitted they remain worried about making mistakes or facing penalties from HMRC.

The findings suggest that although landlords broadly understand the legislation, many still lack confidence in completing the new reporting requirements correctly.

Digital transition continues

The research also indicates that many landlords have yet to fully embrace digital accounting tools.

Just 34% currently use dedicated software for tax reporting and record keeping, while 39% continue to rely on spreadsheets or manual methods. Although spreadsheets can be used under MTD when combined with approved bridging software, landlords relying on manual systems may find compliance more time-consuming as reporting obligations expand.

Keeping accurate financial records (38%), avoiding errors and penalties (36%) and finding sufficient time to complete tax administration (34%) were cited as the biggest compliance challenges.

Opportunity for letting agents

The survey suggests landlords increasingly see letting agents as a valuable source of support during the transition to MTD.

Nine in ten respondents agreed that letting agents are well equipped to help landlords manage their tax reporting obligations, particularly as many already hold key information relating to rental income and expenditure.

More landlords to be affected

With more landlords expected to fall within the regime over the coming year, the research suggests many are already reviewing how they manage their finances and whether they need additional software or professional support to remain compliant.

_{Research methodology: Censuswide surveyed 500 UK landlords and 500 UK letting agents between 22nd and 29th May 2026.}

‍