Ban on letting agent fees: the impact remains to be seen
Philip Hammond’s announcement at the Autumn Statement that letting agency fees for tenants are to be banned provoked ire from letting agents themselves, but the impact of the changes on buy-to-let landlords remains to be seen.
The Chancellor of the Exchequer made the announcement against a backdrop of growing calls for action with renters facing bills for contracts, references, fees and even checking in, sometimes costing more than £1,000.
But with the loss of this revenue stream from renters, landlords are now asking how letting agents will respond, what the effect will be on the market and how this will impact on buy-to-let investors.
There is disagreement about how a similar change in the law in Scotland in 2012 affected rents. The housing campaign group, Shelter, concluded that rents in Scotland were no more likely to have increased following the ban than elsewhere in the UK, while groups representing Scottish letting agents disagreed. The Communities and Local Government Select Committee, meanwhile, took the view that the evidence was inconclusive.
The concern for many landlords will be that letting agents may now look to recoup the lost income from landlords, while market conditions will make it difficult to pass the cost on to tenants through increased rents.