Posts with tag: letting agent fee ban

Housing Minister Expresses Support for Letting Agent Fee Ban

Published On: December 16, 2016 at 11:47 am

Tags: homelessness,letting agent fee ban,letting agent fees,lettings fees,private rental sector

The Housing Minister, Gavin Barwell, has expressed his support for the forthcoming letting agent fee ban, which was announced during the Autumn Statement.

During a debate in the House of Commons on homelessness, MPs expressed concerns over the high cost of renting.

Barwell, who called homelessness a “moral stain”, said the Government is attempting to “deal with the up-front cost of accessing the private rented sector”.

Housing Minister Expresses Support for Letting Agent Fee Ban

He continued: “In terms of dealing with statutory homelessness, access to the private rented sector is key. That is why the Chancellor’s announcement in the Autumn Statement about letting agent fees – I am sure the opposition welcome that announcement – is an important step.”

However, back in September this year, he rejected the idea of a letting agent fee ban, saying it was a bad idea: “Landlords would pass costs to tenants via rent. We’re looking at other ways to cut upfront costs and raise standards.”

The Shadow Secretary of State for Housing, John Healey, who was the last housing minister under Labour, moved this week’s debate.

He pointed out that a record number of homeless people are now sleeping rough, and over 10,000 children will spend Christmas Day in temporary accommodation. Remember that if you want to help fight homelessness, you can join in Just Landlords’ Christmas competition in association with Shelter: https://www.justlandlords.co.uk/news/enter-christmas-competition-help-shelter/

Healey said there was a lack of action to help private tenants, “while eviction or default from a private tenancy is now the biggest single cause of homelessness”.

During the debate, the private rental sector was repeatedly mentioned.

The Conservative MP for Colchester, Will Quince, believes the private rental sector is part of the problem: “We know that the largest cause of homelessness is the ending of a tenancy, largely via a section 21 notice.

“The system – whereby an individual comes to their council for assistance at the earliest possible opportunity when they get into trouble, and the council turns them away and says: ‘Come back when the bailiffs are knocking on your door’, at which point, the person has arrears and a County Court Judgement against their name, and will never again be able to rent in the private rented sector – is failing those individuals and it has to stop.”

Quince insists that the Government should introduce Help to Rent schemes, similar to its Help to Buy initiatives.

The former shadow housing minister, Jack Dromey, spoke of a “rapidly growing private rented sector, characterised by soaring rents, with the average tenant paying £2,000 more over the past five years, insecurity, and often poor accommodation.”

Conservative MP Bob Blackman also called for a national scheme where prospective tenants could get deposits, while the Shadow Housing Minister, Andy Slaughter, said the Government has a “responsibility” to legislate for longer tenancies and rent controls.

What do you think of the proposed measures, particularly the letting agent fee ban?

Rents to Rise if Letting Agent Fees are Passed to Landlords

Published On: November 29, 2016 at 11:39 am

Author: Em Morley

Categories: Landlord News,Tenant Fees Ban

Tags: letting agent fee ban,letting agent fees,letting agents,Scotland,tenant fees

Rents would rise by 2-3% next year across the UK if letting agent fees currently charged to tenants are passed on to landlords, according to a forecast from a City analyst.

James Fletcher, of Cenkos Securities, yesterday gave a buy rating to The Property Franchise Company – formerly Martin & Co.

Rents to Rise if Letting Agent Fees are Passed to Landlords

He says: “Should landlords decide not to pass these costs back to tenants through higher rents, we do not believe this change would materially affect a landlord’s decision to let a new property or renew an existing tenancy.

“However, combined with upcoming changes to mortgage interest offset and the already imposed buy-to-let Stamp Duty this year, political interferences are making life as a landlord increasingly a less attractive proposition.”

Fletcher reports that, for franchisees, tenant fees account for 16-18% of annual lettings income, and 11% of total income.

The entire Property Franchise Company network is expected to earn £57.1m in lettings revenue this year, with tenant fees accounting for £9.1m-£10.3m of this.

In Scotland, the letting agent fee ban has had a positive effect on the firm’s franchisees, claims Fletcher.

He explains that overall, the ban led to higher income returns for landlords and higher landlord fees for agents. The latter more than offset the removal of tenant fees, which were almost completely offset in the first year following the ban.

Scottish franchisees saw their total lettings income rise by 4% overall in the year following the ban. While this growth was attributed to higher instruction numbers (a 5% increase), the ban only affected underlying fee income by 1% in the first year.

Set up fees for landlords rose from around £200 at the start of the ban to £400 currently, reports Fletcher.

Most startling, he notes, was that franchisees’ monthly management commissions increased by 11% of total lettings income in the first year after the ban. Over half of this growth was attributed to higher rents, which resulted from passed-on tenant charges. The remaining growth was from franchisees winning more instructions.

Fletcher insists that the ban in England and Wales will not write-off letting agents’ income stream, but will simply change who pays the fees.

Will the ban on letting agent fees force you to put your rents up?

The Chancellor Missed an Opportunity in the Autumn Statement, Insists the SLC

Published On: November 28, 2016 at 9:27 am

Author: Em Morley

Categories: Landlord News

Tags: Autumn Statement,letting agent fee ban,letting agent fees,mortgage interest tax relief,Stamp Duty

The Society of Licensed Conveyancers (SLC) has offered a mixed reaction to the measures announced in last week’s Autumn Statement, which was delivered by Chancellor Philip Hammond.

The Chancellor Missed an Opportunity in the Autumn Statement, Insists the SLC

Firstly, the SLC welcomed the news that the Land Registry will remain in public ownership, which the society has lobbied for over several years. It claims that this will take away any uncertainty for the CEO of the Land Registry, Graham Farrant, and his team, so that they can concentrate on increasing the coverage of the register and eliminating the backlogs in first registrations and more complex transactions.

However, the SLC was disappointed that the Chancellor did not take the opportunity to reverse the “very damaging reforms” brought in by his predecessor, George Osborne, on private landlords.

The increased Stamp Duty obligation and reduction in mortgage interest tax relief will not only increase rents for tenants, particularly at the lower end of the market, warns the SLC, but will also contribute to a slowdown in the housing market in terms of transaction levels.

The Chairman of the SLC, Simon Law, responds to the Autumn Statement: “We are delighted that the Land Registry is going to remain in public ownership and we look forward to working with their executive in a number of areas that should improve the overall home buying and selling experience for consumers.

“We are less than happy, however, that the Chancellor has not heeded calls to reverse the very damaging attack made by George Osborne on private sector landlords. The level of housing market transactions will be adversely impacted in a way that is damaging to the economy, and will ultimately put up rents for hard-pressed tenants.”

In addition, the SLC is not convinced of the benefits of the Chancellor’s plan to ban letting agent fees for tenants.

“At the end of the day, these charges will end up being paid by tenants in rent and will thus be less transparent than when applied directly,” Law believes. “It will be more difficult to identify the behaviour of rogue agents.”

Do you believe that the letting agent fee ban will have a detrimental effect on the private rental sector?

Will Lettings Fee Ban Force Landlords Out of the Sector?

Published On: November 24, 2016 at 11:32 am

Author: Em Morley

Categories: Landlord News

Tags: Autumn Statement,letting agent fee ban,letting agent fees,letting agents

Following yesterday’s Autumn Statement announcement, the industry fears that the lettings fee ban may force landlords out of the private rental sector.

Will Lettings Fee Ban Force Landlords Out of the Sector?

In his first Autumn Statement, Chancellor Philip Hammond revealed plans to ban lettings fees “as soon as possible”. He believes the ban will save the country’s 4.3m private tenants hundreds of pounds.

But the lettings fee ban may have a detrimental effect on how many landlords still make a profit from renting out homes, believes Paul Shamplina, the Founder of Landlord Action.

“Although there had been some whisperings, confirmation of this announcement will be a big shock to the industry,” he believes. “It is realistic to assume that the ban on letting agent fees to tenants, which will leave a black hole in agents’ profits, will need to be partly recuperated through letting and management fees.”

He explains how this will affect landlords: “At the end of what has already been a tough year for landlords, and with uncertain times ahead, agents hiking up fees could be the final straw for some landlords and see them exit the private rented sector. Those that wish to hold onto their rental properties will have to increase rents in order to cover their costs. We could even see a surge of landlords opting to self-let and manage, which I believe will have a detrimental effect on rental property standards.”

He advises letting agents: “Agents will need to be forward thinking about how they can absorb some of this cost and the loss through other areas of their business. It has never been more vital for agents to educate less experienced landlords on the importance and benefits of a managed service, making sure they are compliant with industry legislation and preventing them from exiting the private rental sector altogether.”

But could the lettings fee ban be a good thing?

Simon Thompson, the Director of AccommodationForStudents.com, says: “With a recent report revealing the housing shortage in some university cities has driven rents up by as much as 10%, the scrapping of agent fees will be welcome news to students. Until now, students had no choice but to pay varying fees in order to secure the accommodation they want.”

But he is also wary of landlords choosing to self-let: “However, this could also have a negative effect on the rental market in the long term. It is likely that agents will be forced to increase landlord fees to cover their losses, which in turn will see landlords increase rents even further, negating any saving made to tenants in the first place.

“Those landlords that typically choose to appoint an agent to manage their properties are usually either less experienced than self-managed landlords, or do not have the time to manage their properties. If more landlords choose to self-manage to save on letting agent fees, this could lead to a rise in poorly managed and maintained properties.”

How will the lettings fee ban affect your investment in the sector?