So what does it mean for landlords?
You would think that the lettings industry has been engulfed in its own version of The Christmas Carol, with the government very much acting like Scrooge and dealing misery upon misery to un-expecting landlords. First, we have lost the interest rate on mortgage payments, then the stamp duty levy was imposed, and now there’s an impending ban on tenant fees. Where are the ghosts of Christmas past, present and future to show them how their wicked ways are impacting on the lettings industry as a whole?
Don’t get me wrong, there are some rogue landlords and letting agents who do give us a bad name, which is why in his Autumn Statement, Mr Hammond wanted to stop the spiralling fees, saying that, “Landlords appoint letting agents, and so landlords should meet their fees.” He was referring to the charges letting agents levy on tenants for services such as referencing and administration. Also in his statement, he suggested this ban would be introduced as soon as possible.
Although the proposed ban is looming, no dates have been confirmed. On the 30 November, Rachel Williamson from the Department for Communities and Local Government, said in a speech to the National Approved Lettings Scheme that, “The ban will need primary legislation, as it can’t happen automatically. There is a lot of pressure on Parliament with Brexit.”
I’m not convinced it will actually happen (a bit like Brexit!). A cap seems a logical step, and one I would welcome.
Williamson also states that the government will be working with the industry to form a consultation. Even if this Bill was to go through relatively quickly, we are not looking at a ban coming into effect until April 2018.
At LeaderFox we are already one of the few letting agencies in the country that does not charge tenants renewal or checkout fees, and we do sympathise, as these charges are often used as cash cows.
Should the ban come into force, what does that mean for you as a landlord?
I do think there is an element of good and bad news here. First, the bad news. I can see a fair number of letting agents going out of business; this is because the supply and demand model has been seriously out of kilter for the past decade, meaning many agencies have resorted to charging such low landlord fees that they rely on charging exorbitant tenant fees to stay in profit, or even to stay afloat. Therefore, if this ban comes into effect they simply won’t be able to keep going, unless they completely change their business model. It is highly likely, in this case, that these agencies will look to pass on at least some of this cost to you, the landlord.
It’s not all bad news, though, so don’t worry. Tenant fees have been banned in Scotland for a few years. Their rents have increased, proportionally, at a greater rate than England, meaning that in Scotland the ban has had a positive effect on landlords’ bank accounts. Once again, the very people Mr Ebenezer Scrooge in the Government claims to want to help are the ones suffering. I think the homelessness charity, Shelter, has a lot to answer for in that regard. They sensationalise the news and drive through legislation that has been completely counterproductive, and many tenants are worse off financially as a result.
In answer to our initial question, what does the Autumn Statement mean for landlords, it looks like nothing, immediately anyway. We will keep you informed on any consultation, and hope that the Government listen to the people within the lettings industry. You never know, maybe the Ghost of Christmas Present will show us a different future in a couple of years.