Last month, letting agents in England were rocked by Chancellor Philip Hammond’s Autumn Statement, in which he announced that letting agents in England will soon be banned from charging agent fees to tenants when they sign for a property.
Currently in England and Wales, tenants can be charged fees by letting agents before signing for a property. These fees commonly cover administration costs, including credit checks, immigration checks and previous references. In Scotland, letting agent fees have already been banned, and the Chancellor hopes that by banning the fees, the cost of renting will be shifted to landlords, and save tenants hundreds of pounds. The government also hopes to improve the level of competition in the renting industry by banning the fees, as landlords will likely shop around for the cheapest lettings agent.
Since the start of 2016, managing and letting agents in England and Wales have been legally obligated to publicise their fees, and the data collected has shown that the fees charged can vary widely across the country, with letting agents in big cities often charging more than those in more rural towns and villages.
The ban may increase the pressure on landlords, who’ve already had a rough couple of months, with the government announcing a range of new measures that are likely to have a negative impact on landlords’ finances. Last month, a new minimum bedroom size for rented properties was announced, and the government also announced plans to introduce a new buy-to-let tax system where an increasing number of landlords will have to pay 40% tax on their buy-to-let earnings; in October, the Welsh Government also revealed that it is to keep the 3% surcharge on buy-to-let homes.
The banning of letting agent fees will only increase the pressure on the finances of many landlords, but the government expects the ban will help address the UK’s growing housing crisis where home ownership is falling and rents are rising. However, following the ban in Scotland, no comprehensive market research had been published to indicate that the ban has benefited or hindered the property market.
Many tenants have expressed their delight that the ban is coming to England, but there are growing fears that the ban will increase costs on landlords, who may subsequently increase their rents on their buy-to-let properties. As a result, many tenants may find themselves paying more rent in the long run.
It must be stressed that the ban will only be enforced on letting agents in England at the current time. It is unclear whether or not the ban will be introduced in Wales at a later date, or even if the Chancellor has the power to bring the ban to Wales. The government is to publish a consultation on the proposed fees ban in January 2017, but this is likely to be more about the form of the ban as opposed to if a ban should occur.
Here at CPS Homes, we, as Cardiff’s largest letting and estate agents, live and breathe property. If you’re looking to rent a property across Cardiff, we have hundreds of properties available in many desirable locations. To find out how we can help you, get in touch today on 02920 668585, email firstname.lastname@example.org or pop into our Woodville Road office in the heart of Cathays. Keep checking back on our blog for more details on the letting agent fee ban as and when they become available.