Buy-to-letNews

Letting fees banned

As expected Chancellor Philip Hammond has banned letting agent fees for tenants.

The Chancellor said  such fees had “spiralled” despite attempts to regulate them and that the government now felt that it needed to take action.

He said: “In the private rental market, letting agents are currently able to charge unregulated fees to tenants.

“We have seen these fees spiral, often to hundreds of pounds.

“This is wrong. Landlords appoint letting agents and landlords should meet their fees.

“So I can announce today that we will ban fees to tenants as soon as possible.”

And the move has been welcomed by the industry.

John Goodall, CEO and co-founder of peer-to-peer platform Landbay, said: “It’s encouraging to see signs of a government finally recognising the importance of the private rented sector, after a flurry of tax hikes left in Osborne’s legacy, but it’s hard to know whether a ban on letting charges will be good news for tenants in the long run. Landlords will have little choice but to absorb letting agent fees themselves and, in time, will pass these on to tenants.

“Scotland has already gone down this route, removing the fees back in 2012, and although there are a lot of moving parts in play here, it saw rents grow by 1.55% over the past 12 months, the fastest growth of all of the UK Home Nations*.

“It’s a start, but the fact is rents are likely to rise faster than house prices over the next five years, so the overall outlook for tenants is still bleak. What would really help those just about managing to climb onto the property ladder, is a bold but realistic commitment to encourage the expansion of rental housing, which would help maintain affordable rents.”

 

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