Autumn Statement 2016 – Landlords ReactionsMake Text Bigger
Chancellor Phillip Hammond delivered his Autumn statement today. No doubt there will be much discussion amongst landlords and letting agents yet again.
And the good news for private landlords and their agents is ….. drum roll ….. errr ……. NONE!
Did anybody really expect a repeal of the legislation that will remove mortgage interest as a legitimate business expense from private landlords over the next four tax years? The responses from MP’s and Treasury are clear evidence that our concerns are not being heard and that we need to shout louder. Perhaps the best we could have hoped for was a softening of the policy to remove the retroactive effects by applying the changes to new purchases only. However, the Treasury clearly don’t give a damn about how their policies will affect the lives of hundreds of thousands of landlords and tenants and the misery it will cause, as has already proven to have been the case in Ireland. They simply continue to trot old the same old sophistry in the apparent belief that if they say the same thing often enough it will all turn out fine.
Clearly we need to re-double our efforts and I am pleased to announce that we have a plan for just that. Our survey below will be the catalyst for our biggest media campaign to date.
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Insurance Premium Tax
This will increase from 10% to 12%. The Property118 GUARANTEE to undercut any ‘like-for-like’ property insurance quotation will continue to apply LINK
Letting Agents will no longer be able to charge fees to tenants
Major letting agents including Foxtons and Countrywide have already seen sharp falls in the value of their shares since this announcement was leaked last night.
Whilst the Chancellors announcement will no doubt be treated by tenants as good news, industry bodies do not see it that way.
David Cox, Managing Director, Association of Residential Letting Agents (ARLA), said …
“A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market. It will be the fourth assault on the sector in just over a year, and do little to help cash-poor renters save enough to get on the housing ladder. This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.
“Most letting agents do not profit from fees. Our research shows that the average fee charged by ARLA Licenced agents is £202 per tenant, which we think is fair, reasonable and far from exploitative for the service tenants receive.
“These costs enable agents to carry out various critical checks on tenants before letting a property. If fees are banned, these costs will be passed on to landlords, who will need to recoup the costs elsewhere, inevitably through higher rents. The banning of fees will end up hurting the most, the very people the government intends on helping the most.”
Richard Lambert, Chief Executive Officer at the National Landlords Association (NLA), said …….
“The new Chancellor is clearly aware of the pressures facing those living in the private-rented sector, but in attempting to improve affordability he has shown that, like his predecessor, he lacks an understanding of how the whole sector works.
“There’s no doubt that some unscrupulous agents have got away with excessive fees and double-charging landlords and tenants for far too long. Banning letting agent fees will be welcomed by private tenants, at least in the short-term, because they won’t realise that it will boomerang back on them.
“Agents will have no other option than to shift the fees on to landlords, which many will argue is more appropriate, since the landlord employs the agent. But adding to landlords’ costs, on top of restricting their ability to deduct their business costs from their taxable income, will only push more towards increasing rents”.
Chris Sheldon. Managing Director of LettingSupermarket.com said ….
“It was only a matter of time before the legislation introduced in Scotland would filter into the rest of the UK so our business model was already prepared and ready for implementation. Our new fee scale to landlords will continue to be the most competitive in the Country offering full management for just 5% of rent (6% for properties inside the M25) and letting fees of just £100 per new tenant (£150 inside the M25). We will not charge for renewing tenancies for existing tenants. We anticipate a substantial increase in business as many landlords will be looking to reduce costs to in order to compensate for continually squeezed profitability, not only as a result of this announcement but also the tax changes announced over the last 18 months to mortgage interest relief and additional stamp duty.”
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