Investing in property could ‘soon cease to be financially viable’

A host of Brexit bills dominated last week’s Queens’s speech, while there were also a few main non-Brexit proposals announced outlining the government’s proposals for the next two years, including a Tenant’s Fees Bill, banning landlords and letting agents from charging letting fees.

The fees ban was initially announced last November during the chancellor’s Autumn Statement, and although the details are still very unclear, the move is clearly designed to shift the cost of all letting agent fees on to landlords, which will make it extremely difficult for many buy-to-let landlords to make any money, according to Simon Gerrard, managing director of Martyn Gerrard.

He described the blanket ban announcement as a “headline grabbing knee-jerk reaction” from a new government “trying to do anything to gain public support”.

He said: “This decision has been made with little consideration for the housing industry and my concern is that, moving forward, investing in property will cease to be a financially viable option for the many.”

Some experts now believe that this proposed change in the law will leave landlords with no choice but to further increase rents, as letting agents look to pass existing tenant fees onto landlords, while others, such as ARLA, fear that as many as 4,000 jobs in the letting sector could be lost.

“A ban on letting agent fees will cost the sector jobs, make buy-to-let investment even less attractive, and ultimately result in the costs being passed on to tenants,” said ARLA’s chief executive, David Cox, who now questions what the point of a formal consultation into a fee ban was if the decision had already been made.

He added: “It’s unlikely the government had enough time to analyse all of the responses from the consultation, as it only closed on the 2nd June. It appears they had already made their decision and therefore the consultation was no more than a ‘tick box’ exercise and they haven’t appropriately taken the industry’s views into account.”

Kate Eales, national head of letting at Strutt & Parker concurred: “Regarding the total ban on letting agent fees outlined in the Queen’s speech, whilst it has not come as a bolt from the blue, it has come as something of a surprise in its speed as the industry consultation was only closed for responses on 2nd June.”

Robert Nichols, managing director of Portico, believes that the ban will come as welcome news to renters, but points out that the fees which allow landlords and agents to carry out a series of vigorous checks on prospective tenants before they let the property will still need to be covered.

“Ultimately these costs have to be paid be somebody, and they’re likely to fall on the landlord.”

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Written by: Houseladder