The Government have today announced that Letting Agents will no longer be able to charge up-front fees for tenants. Chancellor Philip Hammond announced this in his Autumn Statement and stated it would come in “as soon as possible”.
Currently, most letting agents charge tenants a fee to cover referencing, credit checks, administration and preparing the inventory. If this is to be abolished it’s likely that landlords will now foot the bill and it’s possible that rents will increase due of the added costs.
One local agent, Daniel Otton of Buttercross Estates, is supportive of the changes “The current system is completely unfair to tenants and it does need a change. There could be two identical properties For Rent on a street with different agents, one charging a tenant £190 in fees and the other charging over £500 in fees alone.
“This clearly is wrong and unfair to the tenants but I feel the Government should have put a cap on the fees rather than abolishing them totally. Now we could find tenants applying for multiple properties and wasting time as they do not value the application process. Capping fees would level the playing field for tenants.”
This latest announcement is another attack on the private rented sector with changes to stamp duty and interest costs announced last year. This could see more Buy-To-Let landlords decide to sell up, causing a further shortage of properties to rent. Foxtons have already seen their share price fall 11% upon the announcement.
The full details of the plans have yet to be announced but it is expected to come into force from April 2017.