Chancellor Philip Hammond caught the lettings industry unaware with an incredulous Autumn Statement.
The buy-to-let sector took a bashing earlier in 2015 and 2016, with a revised second home stamp duty tier and the proposal of tapering mortgage interest relief, so it was hoped a reversal of fortunes was on the cards.
Alas, Mr Hammond sided with vocal charities supporting ‘tenants’ rights’.
What about the rights of the hard working letting agent? A ban on upfront fees charged by letting agents in England ‘as soon as possible’ will effectively make letting agents charities themselves – undertaking duties and not getting paid for them.
While we ourselves can’t justify £50 for the reprinting of a piece of paper, we do know the cost, time and skill involved in tenant referencing, implementing new laws, accompanying viewings, creating watertight tenancy agreements, belonging to industry bodies, specialist training for lettings staff, feeding properties to Rightmove and Zoopla…the list goes on.
Whether agents pass the cost on to landlords is up to the individual but there’s already talk in the lettings forums of how agents can recoup lost revenue.
We feel offering landlords a full property management service that includes pre-tenancy administration is the way forward, as it provides a one-stop-shop, full compliance and can justify a higher fee.
And now for the clarification. The use of the term ‘upfront fees’ is puzzling and unclear. Could it open the door to ‘end-of-tenancy fees’? Will there be a shift to charges when a tenancy terminates? Would this even be allowed? You can guess that some agents are already debating this point.
We’re also wondering how soon ‘as soon as possible’ is? The move to ban letting agent fees affects thousands of business models and bottom-line figures across England and Wales.
It wouldn’t be ethical or fair to spring this ban too quickly. We’re already hearing of agents pricing up reprints of marketing materials and terms of business, with costs running in to the thousands.
The Autumn Statement isn’t pretty and it’s not useful. Lettings is a market that should be strengthened and encouraged by Government, not made to sit in the corner with a dunce’s hat on.
*Simon Duce is managing director of the ARPM Group, which provides national outsourced lettings support