What now for the letting market?
In his first (and last) Autumn Statement chancellor of the exchequer Philip Hammond announced that the government would move to ban letting agent fees to tenants “as soon as possible”.
Whatever its final form the proposed ban will have a serious consequences for letting agents and landlords. It’s likely to affect the holding fees usually taken to secure a property, the cost of checking references, tenant check outs and deposits.
These are essentially unavoidable costs, and if anything the government has been making the administrative burden on letting agents more onerous, with “right to rent” and further money laundering checks. There are real costs and they will need to be paid for.
We’re also concerned that tenants with poor credit or bad landlord references will have nothing to lose by applying for more referencing. Agents or landlords will have no way of recovering the cost of that work when the prospective tenant withdraws, if effectively all deposits must be refunded.
The devil may be in the detail, and that detail is not yet clear or settled. The government has said it will consult before bringing in legislation, which could take a year or more.
We’ll be working to make sure that the impact on our landlords is minimised, and do everything we can to keep costs down. Through our membership of the ARLA professional body we will continue to be well briefed about the issue as details emerge, and will keep you up to date.
No joy on stamp duty:
The letting proposals come as a further slap in the face for the landlords after the previous chancellor’s increase in stamp duty and the coming removal of tax relief on buy to let mortgage interest.
Philip Hammond had nothing to say about either issue. In reality the slowdown at the top end of the London property market has meant that tax receipts associated with the duty rise are well below government expectations. Whether this will cause the chancellor to think again remains to be seen.
By Jaimie Beers
Jaimie Beers is managing director of Madley Property.