In November 2016, the Chancellor Philip Hammond announced during his Autumn Statement that fees charged by letting agents are to be banned. The news sent shockwaves through the property rental market in England, and the ban could be coming to Wales after several backbench Labour AMs proposed banning the fees in Wales too. Naturally, tenants and landlords had differing opinions on the issue, with tenants happy with the fee ban, and landlords angry, with some landlords going as far to say that the fee ban is another government stealth tax.
Disgruntled buy-to-let landlords have said that they expect letting agents to charge them the agent fees instead, which, they say, will naturally lead to increased rents for their tenants in order to cover the increased costs. Landlords believe that the fee ban is just another stealth tax on landlords designed to make renting private sector homes more affordable for tenants.
When a tenant is interested in renting a property advertised on a letting agent website, they were, in England, often charged an agent fee before any contract was signed. The letting agent fees are often used to cover the numerous administration costs which an agent incurs, such as credit checks, reference checks and immigration checks; the total cost of these fees can be around £800-£1000 depending on the property agent, and the government believes that by banning these fees, tenants will save hundreds of pounds.
In Wales, letting agents are still allowed to charge these fees, and this doesn’t look likely to change in the foreseeable future. In Scotland, the fees have been banned for a while now, despite there being no concrete evidence that banning them has helped or hindered the property market.
The National Landlords Association CEO Richard Lambert waded into the argument saying that many unscrupulous letting agents have been getting away with charging excessive agent fees and double-charging landlords and tenants for too long now. He continued to say that many tenants will naturally welcome the ban on letting agent fees, but what they don’t realise is that their rents are likely to rise in the long term as landlords look to recoup their costs.
He also said that letting agents will have to move the cost of agent fees from tenants to landlords as a result of the ban, which many may feel is appropriate, but will only increase the pain felt by landlords dealing with other measures introduced by the government recently, including increased tax and minimum bedroom sizes.
It must be stressed that the ban on letting agent fees is only in force across England and Scotland. Agents across Wales are still currently able to charge tenants agent fees until further notice. However, if you’re a landlord or tenant looking to find out more about the ban or what it could mean for you in the future, please do get in touch today on 02920 668585, email firstname.lastname@example.org or pop into our office on Woodville Road in Cathays.