If you’re a landlord, you’ve probably heard about Making Tax Digital. While most conversations focus on software, deadlines and compliance, there’s a less obvious, yet very real, impact looming: how this new system could change your relationship with your tenants.
Let’s be honest, tax stuff usually stays behind the scenes, something landlords deal with quietly once a year. But Making Tax Digital is different. Because it requires landlords to keep closer tabs on their rental income and expenses throughout the year, it’s likely to influence how landlords and tenants interact.
Clearer Communication
With Making Tax Digital, landlords will need to use software that automatically tracks rent payments as they come in. This isn’t just about ticking boxes for HMRC, it means late or missing rent payments will stand out immediately.
For tenants, this could mean quicker reminders or follow-ups when payments are late. While that might feel like less wiggle room, it could also encourage clearer, more professional communication. No more landlords “forgetting” to chase rent or tenants slipping under the radar for weeks on end.
Property Maintenance
Because landlords will be logging expenses digitally and updating HMRC quarterly, they’ll have a better picture of how much is being spent on repairs and upkeep in real time.
This could influence how quickly landlords respond to maintenance requests. On the one hand, better tracking might encourage landlords to invest more wisely and proactively in their properties, benefiting tenants with faster fixes and well-maintained homes.
On the other hand, some landlords might scrutinise spending more closely to keep costs down, potentially slowing responses or pushing back on non-essential repairs.
Greater Financial Transparency
One exciting possibility is that Making Tax Digital for landlords could make rental finances more transparent.
If landlords have clear, accurate records showing why costs are rising (higher maintenance bills, tax changes, etc.), they can explain rent increases with facts rather than vague claims. Tenants who understand the reasons behind rent changes are often more accepting and less resistant.
Potential for a More Professional Landlord-Tenant Dynamic
All of these changes mean landlord-tenant relationships may become more businesslike and structured. There will be less room for informal agreements or verbal promises that slip through the cracks.
While some tenants might miss the “friendly” landlord who turns a blind eye now and then, others might appreciate the clarity and fairness that digital record-keeping brings.
Conclusion
Making Tax Digital for landlords isn’t just about tax returns or HMRC deadlines, it has the potential to shape how landlords and tenants communicate, manage payments, and handle property maintenance.
If you’re a landlord, thinking ahead about how to embrace this digital shift could not only keep you compliant but also build better, clearer relationships with your tenants.
