Chancellor Philip Hammond yesterday announced a ban on upfront letting agency fees to tenants which has left many landlords feeling dismayed.
The speed of the news will surprise many in the industry. A consultation will be launched in the New Year, however, I, like most, had expected these measures to not have been declared without prior discussion.
The result, however, is not surprising with nine out of ten landlords feeling that the government is anti-landlord and fearing that the Autumn Statement would provide more bad news for the sector that has been increasingly hit by punitive measures.
Combine this with the sentiment highlighted by the 783 landlords surveyed by Martin & Co, the UK’s largest lettings and property management franchise (by office numbers) who found that 61% were uncertain about the industry’s future.
There has been no timeframe mentioned as to when the ban will come into effect, but as a sector, there is now a need to look at improving efficiencies and costs whilst maintaining a high service level.
The move by the Chancellor resulted from the understanding that upfront costs are too high and restrict tenants from moving into rental properties. By removing these agent fees, the impact is that tenants will have more choices for agents and properties.
The intention that this cost will be levied on the beleaguered landlord may seem reasonable, however, against a backdrop of legislation targeting the incomes of landlords, it is more likely that this cost will be seen in rents, ultimately falling back to the tenant.
The HomeLet Rental Index, published in 2016, states that the average rent in the UK is £902 pounds a month. With the average tenant fee being £337*, this translates to an added cost per month of £28 making renters much worse off.
Ultimately, this ban will serve to expose those who relied on inflated tenant fees, rather than their level of service, to maintain their profits. Those agencies who truly care about their landlords, operate with a high degree of transparency and bring true value to the table will prevail.
*Statistic taken from Citizen’s Advice 2015 report