One of the most widely trailed announcements in Philip Hammond’s first Autumn Statement was the decision to ban letting agents in England from imposing a wide range of fees on tenants.
Campaigners and housing charities had long called for such charges, which can run into the hundreds of pounds for a new rental agreement, to be outlawed.
But landlords’ groups have warned that, if the fees are passed on to their members instead, the result could simply be an increase in rental rates.
The 2016 Autumn Statement examined
What fees are charged for
Letting agents have a wide range of services for which they charge tenants. These can range from drawing up paperwork and running credit checks on potential tenants to renewing tenancies and even changing someone’s name on a rental agreement.
On average, new tenants are forced to pay £340 in the form of such fees when they move into a new house or flat. In some cases, agents charge similar fees to landlords as well.
The reason the government is cracking down only on the fees charged to tenants is that they generally have little choice but to pay them if they want to rent a particular home. Landlords, on the other hand, can simply take their business elsewhere.
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What the impact of the ban could be
There is little consensus over what the implications could be if letting agents can no longer charge tenants. Many estate agents and landlords groups believe that agents will have to recoup their costs elsewhere – and this means increasing the fees charged to landlords.
In turn, they say, this is most likely to lead to a rise in rents, with tenants losing out yet again.
It could also lead to a reduction in the number of investors who wish to put money into buy-to-let. And while this could reduce the number of properties available to be rented, it could reduce the pressure on house prices and make buying a home more affordable.
From a tenant’s point of view, even if the result is a small rise in rents, the costs they face could be much easier to understand. And while they may not be much better off in the long run, their initial costs will almost certainly be much lower.
Campaigners, however, point to the fact that after a similar ban was introduced recently in Scotland, there was no noticeable increase in rent levels as a result.
Paul Green, director of communications at Saga, commented: “Banishing upfront fees charged by letting agents will be good news for the third of over 50s who are currently living in rented accommodation. However, it might not be such good news for the Saga generations who have become accidental landlords in recent years.”
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