Yesterday, Chancellor Philip
Hammond announced his Autumn statement for 2016 and since the moment he stated
that Letting agency fees were to be banned the UK property industry has nearly
done a Kim K and broken the internet.
The majority of industry articles
covering this are up in arms claiming this is Draconian and will result in
rents increasing to a point where no one will be able to afford to rent and the
19% of the UK population who currently private rent will be homeless and all
letting agents will go out of business and private landlords will be left with
empty properties
All very dramatic don’t you think…
A vast majority of lettings
agents currently “double dip” when it
comes to fees, meaning they charge both the landlord and the tenant for the
same job for example drawing up a tenancy agreement, which can cost anything
between £50 - £500 not a bad days work from pressing the ‘print’ button on your
computer
But lets look at the facts…. To start,
the ban on fees will not happen over night, there will now have to be a consultation
and a policy will need to be drawn up, that policy will need to be approved,
this could take months
Secondly, in 2012 Scotland did
exactly this and banned letting agents from charging tenants
The research carried out by
Shelter and published a year later in 2014 called ‘End letting fees: Lessons
from the Scottish lettings market’ Showed that landlords in Scotland were no
more likely to have increased rents since 2012 than landlords elsewhere in the
UK.
Rents did appear to have risen
more in Scotland than in other comparable parts of the UK in 2013; however,
most of this rise is explained by economic factors and not related to the
clarification of the law on letting fees.
Letting agencies in Scotland
describe an extremely healthy private rental sector. All key business
indicators showed very encouraging growth in the 12 months after the ban,
driven mainly by increased tenant demand, possible due to the fact that tenants
could now afford to rent because they saved not paying the high fees.
The majority (59%) of letting
agency managers interviewed said that the clarification in the law on fees had
had ‘no impact’ on their business, with only 24% saying it had a small negative
effect. Not one agency manager interviewed said it had a large negative impact
on their business, and 17% considered the change to be positive for their
business
Less than one in five (17%) of letting agency managers said they had
increased fees to landlords.
The majority (70%) of landlords in Scotland who use agents did not
noticed any increase in fees since 2012. Only one landlord in 120 surveyed said
they had noticed an increase in agency fees and had passed this on in full to
their tenants.
So with these proven facts in place, I think we sound take comfort in
assuming that rents will not see a huge rise and landlords will not see an
increase in their costs, all this will mean is that agents will no longer be
able to double dip
