Nov 24, 2016 LETTING SHARE

Autumn Statement 2016 - lettings agent fees to be banned.


POSTED IN LETTING

Following yesterday's announcement that letting agent lettings fees are to be banned for ingoing tenants we are providing you with the following information from the BBC website to keep you fully informed.

Please bear in mind, this announcement yesterday is simply that, it is simply an announcement and no dates or detail have been released as yet.

Rest assured as and when we hear anything from our sources we will inform all of our customers and clients.

Currently we do not expect this to effect any of our current packages or deals that we have with our landlords.

Yesterday's announcement...

Lettings agents in England will be banned from charging fees to tenants "as soon as possible" under plans announced in the Autumn Statement.

Tenants can be charged fees for a range of administration, including reference, credit and immigration checks.

Chancellor Philip Hammond said shifting the cost to landlords will save 4.3 million households hundreds of pounds.

The move could spur competition as landlords, unlike tenants, can shop around for the cheapest agent.

In Scotland, lettings agency fees to tenants have already been banned.

In England and Wales since last year, lettings and managing agents have been legally obliged to clearly publicise their fees.

Fees vary widely, with costs in some big cities much higher than elsewhere.

Tenants face charges when agents draw up tenancy agreements along with the possibility of a non-refundable holding deposit paid before signing up to the deal. 'It is incredibly expensive'

Natalie Lightman says it is "incredibly hard" to find a place to live in London, but eventually she found a "cosy but expensive" flat.

"Then I paid £150 just for the privilege of putting down a deposit," she says.

In total, she paid upfront costs of £2,000 before setting foot in the flat, of which the letting fees were a part.

"Banning fees is a good idea as it will drive up competition," she says. "A lot of people cannot afford these costs."

But Julie Turner, who is a landlord, says the extra costs faced by landlords will lead to higher rents.

"We do not make a profit on our property we rent out because there is the service charge and insurance and mortgage, and there is a new tax law coming in," she says.

"If the administration fees come back to the landlord the rent will have to increase. It is not being greedy, it is just we need to cover our costs." Choice

Charities have said that these primarily upfront fees have risen in recent years.

The latest English Housing Survey shows fees typically cost £223. However, Shelter research in 2012 found that one in seven tenants pays more than £500.

The charity said renters had no choice over the agent they dealt with after finding a house or flat. Landlords, on the other hand, were able to choose between agencies to act for them when renting out their property.

Many tenants are angry that, with more competition for decent places, they are forced to pay to guarantee somewhere to live. Some argue that the fee for drawing up a tenancy agreement far outweighs the actual cost to the agent.

Overall, along with rent in advance and a deposit, the average upfront costs faced by renters using a letting agency are more than £1,000 nationally and over £2,000 in London, according to Shelter.

The industry has argued that administration has a cost and has argued for stronger consumer protection through regulation of the sector, rather than a ban.

David Cox, managing director of the Association of Residential Letting Agents (Arla), said: "A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market.

"It will be the fourth assault on the sector in just over a year, and do little to help cash-poor renters save enough to get on the housing ladder. This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.

"Most letting agents do not profit from fees."

Agents saw some of the biggest falls in company share prices in early trading, with Foxtons down 11%, Countrywide down nearly 6%, and Savills also falling slightly.

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