23rd
Nov 2016
Chancellor Philip Hammond's decision in his Autumn statement of introducing the banning of letting agents' fees for tenants in England, has angered the agencies with many industry heads damning the announcement.
He announced last week that the ban would be introduced "as soon as possible", however there will be consultations taking place early in the New Year with the sector and other parties. Primary legislation will have to be introduced after the consultation period which could take a few weeks.
The chairman of a London based agency, Stephen Ludlow, believes that it is more than likely that some agents will have to reduce their expenditure on training and quality control as well as marketing, this could result in customers receiving less of a service.
Ludlow said :"Without reputable letting agents fully committed to the sector we will potentially see more lettings back in the hands of unregulated private landlords, and leaving tenants with far lower levels of protection than at present”.
He added :"The last 30 years has seen service standards in the private lettings market increase quite significantly. Cut off the income of this sector and it risks creating a race to the bottom in levels of standards.”
Lucy Morton former president of a lettings agents' association warned that :“It is essential that agents do not cut corners and fail to carry out stringent referencing checks.”
Another major letting agents in September and October, carried out a survey with tenants and 75% did not want have to pay more rent because of the ban of letting fees.
Managing Director of the firm, Glynis Frew, said: “Agents perform both a service and a paralegal role when assisting tenants to move home. Unfortunately, it is very likely rents will increase in response to these changes.
Chairman of an estate agents, Nick Leeming, states that many in the sector are saying that the government's intention is extremely short sighted as it is more than likely that tenants will have to bear the brunt of higher rents.
He said :"While the ban still requires a government consultation before it is implemented, its impact on the UK housing market could be far reaching. Affordability issues which surround purchasing homes means that for many, the only option is to rent. We’ve seen a consistent reduction in the number of landlords buying investment properties since April this year which means that fewer rental properties are now coming on to the market to serve the growing rental population."
“A better solution would have been to create a more competitive fee environment and ensuring that landlords are not further discouraged from the market”
However the chief executive of a sixty London agency Jeff Doble, does not have a problem with such a ban and said: “Whilst we await the exact detail of the legislation we broadly welcome the government's action on this. We would prefer to see compulsory regulation of letting agents but this is a step in the right direction, as it will lead to more transparency and make life difficult for rogue estate agents.”
An online estate agency's chief executive Rob Ellice is also in favour of Hammond's decision and said : “Any sensible agency won't pass on the charges to landlords, due to competition in the sector, so we don't foresee rent rises as there is no need to add the fees to rents. Having the Government step in to abolish these fees is another example that the industry cannot self-regulate and be fair to consumers. The greed of a few has cost the many as it’s a minority who have charged excessive fees rather than the majority of agents.”
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