HR and payroll for property and real estate in the United Kingdom
Reviewed by Mellow Editorial Team, HR & payroll content team
Property and real estate employers in the UK face a distinctive payroll and HR picture: a workforce that often mixes salaried staff, commission-only contractors, and TUPE-transferred employees — all under the same roof. Getting the employment model right from the start determines how much tax, admin, and legal exposure you carry.
Employment status matters more in property than most sectors
Estate agencies, property management firms, and developers frequently use self-employed negotiators or letting agents alongside employed staff. HMRC applies the same employment status tests here as everywhere else — control, substitution, and mutuality of obligation — but the commission-heavy nature of property sales makes misclassification a real risk.
A negotiator who works set hours, uses your systems, and cannot send a substitute is almost certainly an employee, regardless of what their contract says. Getting this wrong means unpaid employer National Insurance at 13.8%, unpaid pension contributions, and potential Employment Tribunal claims. The Employment Rights Act 2025 strengthens day-one rights, which makes the cost of misclassification higher than it was even two years ago.
If someone is genuinely self-employed and paid purely by commission, you still need to confirm their IR35 status if your business turns over more than £10.2 million, has a balance sheet above £5.1 million, or has more than 50 employees. Below those thresholds, the responsibility sits with the individual.
Commission, OTE and variable pay in payroll
Most property roles carry an on-target earnings (OTE) element. Payroll for this workforce is more complex than a straightforward salary run.
Key points to keep on top of:
Minimum wage compliance. Commission counts towards National Minimum Wage only in limited circumstances. If a slow sales month means a negotiator's commission earnings drop, you must still ensure total pay divided by hours worked meets the National Minimum Wage rate for their age group. Running this check every pay period is non-negotiable.
Income tax and National Insurance on variable pay. Commission is earnings, so it attracts income tax through PAYE and employee National Insurance at 8% (up to the upper earnings limit, then 2% above it). You report it to HMRC under Real Time Information via a Full Payment Submission on or before each payday — the timing does not change just because the commission figure was confirmed late.
Pension auto-enrolment on qualifying earnings. The employee contributes a minimum of 5% and you contribute at least 3% of qualifying earnings. Variable pay can fluctuate enough to push employees above or below the qualifying earnings thresholds in different months. Your payroll software needs to handle this dynamically, not just apply a fixed percentage to a fixed salary.
Property management and TUPE transfers
Residential and commercial property management contracts change hands regularly. When a contract to manage a block of flats or a commercial portfolio transfers to a new provider, it is likely to trigger the Transfer of Undertakings (Protection of Employment) Regulations — TUPE.
Under TUPE, employees assigned to that contract transfer automatically on their existing terms and conditions. Their continuous service carries over. You cannot harmonise their contracts simply because the transfer took place. In practice this means:
- Carry out due diligence on the transferring employees' pay, hours, holiday entitlement, and any enhanced sick pay or notice terms before the transfer date.
- Inform and, where there are collective representatives, consult employees in good time — failure to do so can result in a compensation award.
- Update your payroll and HR records on day one of the transfer so RTI submissions are accurate from the first payday.
Property employers who grow through contract wins rather than direct recruitment encounter TUPE far more frequently than most sectors. Building a clear internal process for it saves significant time and legal cost.
Holiday pay for workers with irregular hours
Letting negotiators, part-time property managers, and contractors working variable hours are entitled to 5.6 weeks of statutory annual leave per year (28 days including bank holidays for a five-day week). For workers whose hours vary, holiday pay must reflect their average pay over the relevant reference period, including commission and regular overtime — not just their basic rate.
The Supreme Court's ruling in Harpur Trust v Brazel established that the 12.4% rolled-up holiday pay method is not compliant for workers with genuine irregular hours and no fixed term. If your lettings team or property managers are on zero-hours or irregular contracts, check how your payroll calculates holiday pay. Underpaying here creates liability that accumulates quietly and can stretch back years.
Seasonal and project-based hiring in development
Housebuilders and developers often recruit project managers, site administrators, and sales staff on fixed-term contracts tied to a specific development. Fixed-term employees have the right not to be treated less favourably than comparable permanent staff, and after four years of successive fixed-term contracts they acquire permanent employee status automatically.
For payroll, the practical issue is managing starters and leavers accurately. Each new fixed-term engagement requires a starter declaration, correct tax code application, and RTI notification. At the end of the contract, a P45 must be issued promptly. If the same individual is rehired on a new fixed-term contract shortly after, HMRC may query the gap and your previous RTI submissions — so document the business reason for each contract clearly. A P60 is due to all employees still on payroll by 31 May after the end of each tax year, and any benefits in kind, such as company cars common in senior property roles, must be reported on a P11D by 6 July.
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