LETTING AGENT FEE BAN
How will affect Tenants and Landlords
The Chancellor announced in his Autumn statement that there was to be a ban on agents letting fees. These can include fees for renewals, inventories, credit checks and referencing and administration fees and can average around £337 in costs for the tenant to pay.
This has not been an immediate ban as the government first needs to enter into a 12 month consultation period on the issue and this is unlikely to happen until next year so it may be some time before the ban comes into effect.
It was feared that this ban would result in rent hikes by landlords to recover the cost as agents move their fees to them.
Property investors and owners had a bad year in 2016 when the stamp duty levy was imposed and the upcoming changes in tax will affect their profits further. This has encouraged many landlords to sell up resulting in a drop in the housing availability which was reflected in October figures. However demand also dropped off in the last quarter of the year as expected due to seasonal fluctuations.
A recent Buy to Let report by Kent Reliance showed that many landlords have put their properties in limited companies or moved their holding to a partner who pays a lower rate of tax in preparation for the changes in tax coming into effect in 2017.
The report also indicated that the ban on letting fees will possibly reduce the upfront costs for tenants but landlords will increase rents to offset any added cost – the net result being that tenants are likely to be no better off. This will have the unfortunate effect of keeping tenants in rented property as it will negate any savings intended by the fee ban. It will mean that they are still unable to make the jump to becoming homeowners as the government was attempting to encourage as they face similar costs to now.