Autumn Statement 2016: Property sector stunned as chancellor bans letting fees
The UK’s property sector has been left reeling after the chancellor stated that the government will ban agency letting fees for private tenants as soon as possible.?
Announcing the move as part of today’s Autumn Statement, the chancellor stated that the UK had ‘seen letting fees spiral despite attempts to regulate them.
Agency letting fees are used to cover administrative costs of bringing new tenants into homes, and the ban on upfront costs has been a campaign focus of housing charities for several years. According to the Association of Residential Letting Agents, the average fee per tenant is 202, but other organisations have estimated that it is higher.
The ban on upfront agency fees has already been brought into Scotland, but was resisted by David Cameron on the basis that landlords would inevitably pass down costs to private tenants.
In response to the policy, buy-to-let landlords will be seeking assurances from agencies that mandatory costs will not be shifted directly onto them.
Heavy criticism of the policy came from the direction of Association of Residential Letting Agents. Managing director David Cox said that the ban on letting fees was merely a crowd-pleaser, representing an unfair attack on landlords and agencies.
?[The ban] will be the fourth assault on the sector in just over a year, and do little to help cash-poor renters save enough to get on the housing ladder, Cox said in a statement.
Speaking on behalf of the UK’s landlords, Richard Lambert, chief executive of the National Landlords Association, acknowledged that while some regulation of letting fees was necessary having hurt both landlords and tenants celebrations of the ban would not last long.?
“Some unscrupulous agents have got away with excessivefeesand double-charging landlords and tenants for far too long.
“Banningletting feeswill be welcomed by private tenants, at least in the short-term, because they won’t realise that it will boomerang back on them, Lambart said in a statement.?
The Residential Landlords Association has also already challenged the policy, its chair Alan Ward agreeing that banning letting fees would lead to an increase in rents with costs passed onto tenants.
In a statement, Ward suggested that steps to improve the transparency? of what letting fees covered would have been of greater benefit to landlords and their tenants.
The scrapping of letting fees has already taken its first scalp the UK’s estate agents. Reports have claimed that Foxtons? shares have dropped ten per cent since the policy was leaked in an early announcement.?
The government’s sudden shift in policy did not go unnoticed. It’s also an embarrassing U-turn in policy, claimed Ben Madden, managing director of London estate and letting agents Thorgills.