Pitchforks at the ready…… Letting agency fees to be banned.

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