Charles Curran, Principal of Maskells
It does seem as if the private landlords are being further punished
The Chancellor announced that letting agent fees to be banned.
No timeframe has been provided for ban on lettings fees but questions remain for items such as credit checks – are these still chargeable at cost or must all fees now be borne by the landlord?
With Mortgage Interest Rate Relief reduction still in place, it does seem as if the private landlords are being further punished. We do expect Landlords to seek to increase rents to take into account any additional costs.
We will have to see the language of any proposed law before making our final analysis.”
Mark Pollack, Director of Aston Chase
No immediate respite for the much maligned estate agency profession
There was nothing too dramatic from a property perspective in today’s Autumn Statement. However there was yet another blow for the estate agency industry especially as many firms in London are now increasingly dependent on income being generated by Lettings Departments. This at a time when there has been an acute reduction in the volume of sales transactions largely due to the punitive SDLT levels. In London, these have affected far more prospective purchasers than just the wealthy as well as, indirectly, all those who earn their living from allied industries.
From an Aston Chase perspective, our charges are reasonable in comparison to many of the larger corporate agencies who also charge their landlords an administration fee. Indeed, we have always considered it a little cheeky to charge for a tenancy agreement that we already have on file, although this is an industry norm. However, the reference fees are a cost that we have to pay to a third party so under the new legislation, in the future agents would presumably have to pay for these themselves.
Support for First Time Buyers
The Chancellor’s announcement to boost support to first time buyers will naturally be welcomed by both house builders and aspiring homeowners alike and whilst this will, in the passage of time, inevitably have a positive ripple effect on the prime London market, the reality is that it will have little or no immediate impact.
So, no immediate respite for the much maligned estate agency profession, albeit an overall positive message about the health of the UK economy. This will help to ensure that London continues to attract international buyers (already circling due the our devalued pound). The supreme irony is that, despite the Governments good intentions, London housing stock is likely to become even more unobtainable for most people who simply can’t afford the deposits required and the non-fundable SDLT despite in many cases being gainfully employed with an excellent salary.”
Mark Parkinson of Middleton Advisors
Many buyers and estate agents will be disappointed there was no rethink on Stamp Duty
There will be little surprise that the economic outlook is bleaker due to Brexit and although many buyers and estate agents will be disappointed there was no rethink on Stamp Duty, it was always a too politically sensitive matter. Probably more significant might be that there were no further taxation measures taken against the wealthy.”
Simon Barnes of H. Barnes & Co
While it all looks pretty positive we will need to see exactly how “no fees for letting agents” can work.
Money for new homes has to be a good thing. Hopefully this should take some of the heat off punishing those higher up the property ladder. Again increasing the minimum wage has to be a positive move, possibly because after Brexit, they will throw out all the cheap labour. Hopefully, because otherwise we’ll be paying higher salaries for poor work.”
Alex Newall of Hanover Private Office
Underwhelming policies and eye watering rising debt
- £1.4 bn for 40k new affordable homes = only £35k budget per property. Low quality housing which won’t be built to last is on it’s way!
- Letting agents’ up front tenant fees to be banned ASAP – Good news for low income tenants. Bad news for letting agencies who have already been hit by aggressive changes and tax rises on buy to let properties. Share prices of agents already affected.
- No change to stamp duty will be a disappointment to those in high end residential property and will limit the mobility of the UK labour force. Housing liquidity to remain low and continue to force down stamp duty tax receipts for HM’s Treasury.
- £23 billion on innovation and infrastructure and £220m to target traffic pinch points will open up new markets for commuters and reduce travel times.”
Tim Hassell of Draker
Anything that helps lower income families and tenants is a good thing
However this may not be the good move for private tenants that the government hopes for. Currently, tenant fees for all agents are a vital revenue stream in a part of the industry that is already relatively low profit for estate agents. This news will inevitably lead to agents passing some, or all of this cost on to their clients resulting in a rise in rents. Landlords are already feeling a great deal of financial pressure because of the tax changes made by the government last year.
However, in Prime Central London, in my opinion, this is actually fantastic news. It will give more people a reason to rent and will be likely to boost the overall volume of people renting property. It is already much cheaper to rent than buy and this will further the stimulus, by default benefitting our landlords, who are currently experiencing a slower market.
To get it right the government should regulate the level of fees being charged by rogue agencies, rather than taking a broad stroke approach of outright banning what is considered by most to be a reasonable charge. There does not seem to be too much logic to the current interpretation of the announcement. At Draker, we work hard to not only take a fair approach to all fees, but also to make a point of earning them. Maybe fees charged by anyone should be banned to help consumers out?”
Catherine Cockcroft of Aylesford International
“The Autumn Statement announced that letting agents in England will be banned from charging fees to tenants as soon as possible and I understand that there will be a consultation process in the New Year.
Whilst this will not really affect our business as our fees to prospective tenants are minimal, but it depends on what they term as ‘fees’.
Currently we charge a one off amount of £180 including VAT for the tenancy agreement (regardless of how many Tenants are living in the property) and a further £90 for renewals.
There would be other fees that would have to be clarified and I would hope that this will happen in the consultation process, for example:
- We charge late payment fee of £30 including VAT if the rent is paid late, as we have to chase it continually until it is paid.
- We charge for the credit referencing to be done. This amount is sent directly to the credit referencing company, so should not in my opinion be termed as ‘fees’, but it may come under the fees bracket. If so, then this charge would have to be transferred to the Landlord.
- If a landlord agrees to release a tenant from his tenancy in order that another tenant can take his place, there will be costs involved to the landlord for preparing a new tenancy agreement as well as referencing and checking the inventory. In these circumstances it is in the tenants interest to be released from the tenancy, but the landlord is being penalised, if these charges cannot be passed to the tenant.
- Inventory in/check out – this is the document drawn up by an independent inventory clerk to establish damages and dilapidations during the term of a tenancy. In order for this to be an independent process, the landlord usually pays for the cost of the inventory make and check in and the tenant pays for the inventory check out. This is not a fee to agents, but does it come under fees to a tenant?
Brendan Roberts of Aylesford International
“It is disappointing that the Chancellor Philip Hammond appears not to have addressed SDLT or the additional penalty for those buying a second home or rental investment, which was high on the list for those living in London and the South East.”