In today’s Autumn Statement, Philip Hammond has targeted letting agents by axing the fees tenants pay for negotiating the tenancy, references, inventories and drafting contracts. While this appears to be a move designed to help the little guy, those within the lettings industry recognise that this will only ensure that rogue landlords and letting agents continue to flout the law while reputable agencies find their financial burden increase even further.
Vidhur Mehra, Finance Director of Benham & Reeves Lettings comments, “In recent years, the lettings industry has been performing a role that really should be performed by the Home Office, the Treasury or even the Financial Conduct Authority. The Government is asking us to conduct investigations on their behalf but then disincentivising us by asking us to absorb the cost. The Government can’t have it both ways. As has happened in Scotland, agents and landlords will simply recoup the cost by raising rents.”
The charity Shelter has spearheaded the campaign to abolish fees, calling them “unfair” and “unnecessary”. Politicians have historically pushed back, despite Shelter’s halo of charity, with Baronness Hanham, the Parliamentary Undersecretary of State, Department for Communities and Local Government stating that the Government does not support a blanket ban on fees as “it would drive up the cost of rents.”
Following a reinforcement of the ban on fees in Scotland, a review by the Association of Residential Letting Agents (ARLA) found that agents have gone out of business, raised fees to landlords or that tenants’ rents have risen. Another Scotland based organisation found that many agents simply flouted the law and continued to charge tenants fees.
Philip Hammond’s decision is especially shocking given that the burden on letting agents has increased considerably over the last few years. Rather than simply processing a tenancy agreement between the landlord and tenant, the Government now requires letting agents to conduct a series of checks to prevent identify fraud, money laundering and to ensure the tenant has the legal right to stay in this country. Whereas these checks are normally conducted by government bodies in other countries, in the UK these time consuming checks are left in the hands of private lettings businesses, many of which are relatively small and family owned.
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