Autumn Statement: Ban on letting fees ‘bad for tenants in long term’, agents claim
- Credit: PA
Tenants rental fees change is bad news for renters in the longer term, claim
The Chancellor’s plan, to ban rental and letting agents from charging tenants’ fees had caught the industry completely unprepared.
But agents say it will simply be removing the cost from one side of the transaction, from tenants to property owners, landlords.
In the long term those costs would appear in higher rental chargers.
ARLA member Robert Ulph, managing director of rental specialists Pennington, in Ipswich said: “It will just shift the cost from one person to another.
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“This is industry wide, and nobody was expecting it. It is a bad move.
“There may be some agents who have been charging too much.
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“But we are always seen as `baddies’.
“These costs are usually for vital and necessary checks, on a tenant, before they move into a property.
“Someone will have to pay for them.
“If that is the landlord, then the costs will be added into the rent at the next review.
“One option might have been capping these charges, but it has come out of the blue.
“I hope the industry will be able to sit down and talk to our MPs, and the Chancellor, before this is imposed - if it is not too late,”
Sarah Bush, director, Cheffins Residential Lettings added:“The government needs to focus on the regulation of agents rather than banning up-front fees in their entirety. “Rogue agents charging astronomical fees create the headlines and subsequently all agents are deemed guilty by association. Fees that are charged by reputable agents can be accounted for and justified at every step of the letting process.
“ The banning of fees across the board will ensure that the costs are passed directly to the landlord, who in turn will increase rental prices to cover their respective costs.
“A prohibition by the government on fees, combined with mortgage interest relief, will stifle a housing market that is already at breaking point and landlords are likely to leave the private rental sector en-masse. By trying to help tenants and pour cold water on the private rented sector, in reality the government is doing nothing but heating up the situation for both tenants and landlords alike.
“Landlords must continue to be protected if we are to encourage a thriving rental market. As ARLA-registered agents, we will be working with regulator ARLA and looking to find a solution that will protect registered landlords and our clients can be confident that we will support them every step of the way.”
find a solution that will protect registered landlords and our clients can be confident that we will support them every step of the way.”
Caroline Edwards, head of residential at Carter Jonas Suffolk, said: “In bypassing Stamp Duty revisions in the Autumn Statement, the Chancellor has missed a prime opportunity to revive the top end of the market, not least because current inactivity can be traced back to the reforms of November 2014. Stamp duty is the only negative stalling the market - even the attractiveness of the pound to dollar based buyers, affordable borrowing and pent up demand cannot overcome the crippling transactional costs of moving house.
“With some vendor’s reluctant to adjust the asking price of their property and an emerging reliance on overseas money to inject liquidity into the market, we could create a potentially toxic landscape for residential property.
“A reduction in Stamp Duty costs is the final catalyst that the market needs to boost transactions and we will lobby for this in the Spring Statement. Of course, the top end does not operate in isolation and, if left untended, could create a bottle neck at the entry points sought after by first time buyers.”
Ian Pulford, partner in Upstix, Capel St Mary added: “The Chancellor of the Exchequer announced that the Government would seek to ban the fees that letting Agents charge prospective tenants. This is an important issue and, as a member of the Association of Residential Letting Agents, Upstix is in full support of safeguarding the interests of both tenants and landlords. We certainly approve of a ceiling on the fees that letting agents may charge and a restriction on the activities that may be charged for.
“Despite what you may think banning all agency fees to tenants is certainly not in the interests of tenants.
When someone applies for a rented property there a several activities that must be carried out in the interest of both tenants and landlords: the preparation of the tenancy agreement and inventory. While the former is a relatively straightforward task the preparation of inventories can take anywhere from 6 to 12 hours.
“It seems to us that it is reasonable for tenants to pay a fair share of this work.
“If a ban is imposed on the fees charged to tenants the agency costs associated with the necessary administration will, in all probability, be passed on to landlords which, in turn, will lead to rent increases. This will probably mean that over the lifetime of a tenancy tenants will end up paying a lot more than they would had an appropriate fee been charged at the commencement of the tenancy.
Control of excessive fees is a good idea, but please Mr Hammond don’t throw the baby out with the bath water by banning fees altogether.”