In the Autumn Statement the chancellor, Philip Hammond announced new government policies to tackle the housing challenges the UK faces.
One of the biggest changes for the buy-to-let sector was that letting agent fees will be scrapped.
The ban will help struggling renters, as the average cost of these fees is £340 per tenant.
As a result of the new ban, stocks of Foxton’s and Countrywide fell sharply.
However, there has been concerns in the industry that the fees could be passed on to landlords, who are already facing the upcoming ‘tax attack’ in April 2017.
Experts fear landlords will be left to foot the bill, as estate agents will raise fees to make their money back. As a result landlords could be forced to raise rents to cope with more financial strain.
Others advise landlords to look elsewhere for new letting agents to cut costs. The emergence of online letting agents who can undercut high street agents could be where landlords turn next as a way of negating the need to increase rents.
Many believe that the ban could backfire as landlords are left with no choice but to raise rents, making rents even more unaffordable.
Additionally the government plans a comprehensive package of reform to increase housing supply and help first time buyers.
A new fund, the Housing Infrastructure Fund, will invest £2.3 billion into housing by 2021. The fund will be competed for between local governments in high demand areas and will help to build 100,000 new homes.
A further £1.4 billion will be provided in 2020-21 to start building an additional 40,000 affordable homes.
Funding will be made available for a large-scale regional pilot of the Right to Buy scheme too.
The scheme will be for housing association tenants, helping over 3,000 of them to buy their own home with under the new right to scheme discounts.
Will you look to pass on any additional costs, or do you plan to absorb them ?
Well, following the announcement last month that Chancellor Philip Hammond is to abolish letting agency fees for tenants, it is expected that many private landlords will increase rents to compensate. This is a further blow to buy-to-let landlords who are also facing higher borrowing costs and increased Stamp Duty fees, as the Government cracks down on the sector. Tenants’ fees add on average £340
to the cost of letting a home, so naturally the 4.3 million renters in the UK will be concerned of further rental increases when landlords have to pay the letting agency fee themselves.
Professional, corporate landlords such as Folio London offer a fresh alternative to private landlords. Renting with Folio London, tenants can be assured against these increases and any unpredictable changes in the market. Many lettings agencies charge for administrative work
such as contracts and inventories. Folio does not charge admin fees, only a deposit of £350 to secure the property while references are checked, which is then deducted from the first months’ rent and deposit.
For further information on Folio London and the rental offering across the capital, please see attached press release and images.