Hammock raise ratchets up MTD landlord competitionby
A $5.5m funding round for UK property technology firm Hammock has further intensified the competition to capture the landlord market ahead of MTD ITSA mandation.
An injection of $5.5m in funding will allow Hammock to scale up its team, speed up its product roadmap and capitalise on the arrival of more than 2m landlords into the Making Tax Digital for income tax self assessment (MTD ITSA) regime.
Founded in 2019, Hammock initially focused on selling to the landlord market. However, according to its founder and CEO Manoj Varsani, they soon received enquiries from accountants whose clients were using the tool and so created a dedicated partnership offering.
Using open banking application programming interfaces (APIs) to pull in data from existing bank accounts, Hammock offers landlords and their agents access to services like real-time banking, bookkeeping, draft property tax statements and property insights. These include the ability to track payments in real time, rental values, occupancy rates, rental yields and a profit and loss analysis graph. There is also the additional option to open a current account that is fully integrated with the software.
Landlords can also manage property compliance within the software itself, storing records for gas, electricity, energy performance certificates (EPCs) or tenancy agreements, and setting reminders to renew services such as insurance.
The platform caters for more complex landlord structures such as limited companies, joint ownerships and HMOs, and Hammock has also recently released a furnished holiday let (FHL) functionality.
Accountants working with Hammock have access to a dashboard that contains a client list, bank accounts, properties, rent and expenses tracked, and can go in and review each account.
“When it comes to landlords, accountants experience shared pain points and often end up managing the bulk of the admin work,” Hammock co-founder Marco Ferrari told AccountingWEB. “Chasing for documents to meet deadlines, different accounts relating to different properties, messy documentation when it comes to invoices and receipts. We’re successful with landlords and their accountants because we solve a lot of these pain points.”
Ferrari also highlighted what he called “the accountants’ best feature” – the ability to manage different ownership structures within the app. “If your client owns 25% of the property, then Hammock highlights the pro-rata 25% of the transaction,” he said.
When it comes to the April 2024 MTD ITSA mandation deadline for landlords, Hammock plans to manage almost the entire workflow. Landlords or agents can submit the four quarterly returns through Hammock, then pull through end-of-year data and submit via accountants’ normal tax software or extract and file using bridging software.
Hammock’s pricing direct to landlords starts at £5 a month for those with one to three properties, then £10 a month for four to 10 properties and a customisable offering for those with more. There are discounts available for accountants depending on the number of users. A married couple or two business partners just need one Hammock licence.
AccountingWEB view: The MTD landlord landgrab
The UK landlord population stands at around 2.65m, increasing 49% from 1.8m over the past five years. This spike has been driven by a combination of first-time buy-to-letters, the stamp duty holiday introduced as a response to Covid, low mortgage interest rates and poor returns on other forms of investment.
The Hammock raise adds more fuel to an already smouldering software market for landlords. When the MTD ITSA rules go live in April 2024, individuals with rental income above £10,000 will be required to store and submit their accounting records digitally (or via spreadsheets and bridging tools) – a fact that hasn’t gone unnoticed in software circles.
Hammock is one of several vendors looking to lead a new generation of landlord software. FreeAgent recently released a bespoke version of its existing accounting system designed for individuals who earn income from property, where landlords can keep digital records of their property income and costs, as well as make the necessary MTD ITSA submissions.
Tax app Untied offers a property landlord app solution, property software tools PatMa and Landlord Vision are currently listed as “in development” on HMRC’s list of MTD ITSA software, and rumours of more products from established vendors in the accounting space, accountancy firms and other interested parties continue to circulate.
As with most things in accounting software, the biggest competitor landlord software vendors will face in the battle for hearts and minds will be the profession’s favourite tool – Microsoft Excel. For the smallest landlords just scraping over the mandation threshold of £10,000, where any additional cost is keenly felt, specialist software could be a tough sell. For the rung above this, Hammock’s proposal to add value through its additional compliance solutions may be a real difference-maker.