Unfair letting fees have long been a problematic issue and it wasn’t until the the late 2016 Autumn Statement produced by Chancellor of the Exchequer Philip Hammond, that the problem was tackled head-on at last.
The statement was given on the 23rd of November 2016 last year in the Parliament (the full version can be found here, on the official government’s website) and the news spread rapidly like wildfire and raised numerous questions among tenants, landlords, letting agents and property portfolio managers alike all across the country.
Will tenants really save hundreds?
In recent years, fees had become so out of control that when the Autumn Statement was publicly released, it resulted in a 13pc share prices drop for Foxtons, one of the most high-market estate agencies in London. On average, tenants pay around £337 so savings could indeed be quite substantial.
What the ban means for letting agents
Some experts believe the fee ban might drive landlords to self-manage their property, potentially signifying great financial loss for letting agents. Are landlords really ready to take the plunge and go solo?
Will renting cost go up?
The ban was probably intended to shift the costs from tenants to landlords. Many people firmly believe that the unintentional consequence of this letting ban might be rising rent costs, as landlords will be looking to make up for the financial loss. Admin fees and commissions might go up but landlords shouldn’t be charged for it without trying to re-negotiate. According to conservative party member Mike Freer, this is exactly what happened in Scotland in 2012 when the ban was implemented. There is another side to the story though, as an independent research commissioned by Shelter actually found that the rise was small and short-lived. Another recent survey conducted by online letting agent Upad (and published on their blog) showed that around forty percent of landlords intend to rise up prices if extra fees are passed onto them to pay. But those numbers don’t reveal facts, only intentions: tenants and landlords will have to wait and see.
In recent years, fees had become so out of control that when the Autumn Statement was publicly released, it resulted in a 13pc share prices drop for Foxtons, one of the most high-market estate agencies in London.
When is the letting fee ban going to be implemented?
A few months after the Autumn Statement, tenants are now growing worried that the government will drop the ban as consultation for the projects has not began yet. It is however due to be held in the Spring, so everything suggest that the ban is indeed going forward even if it might take a little while to be implemented.