Extra Tax On Landlords Will Hurt Agents More Than Chancellors Ban On Tenants Fees

by Mark Alexander

8:12 AM, 24th November 2016
About 3 years ago

Extra Tax On Landlords Will Hurt Agents More Than Chancellors Ban On Tenants Fees

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Extra Tax On Landlords Will Hurt Agents More Than Chancellors Ban On Tenants Fees

Letting agents who are arguing about the ban on charging fees to tenants are still failing to recognise this isn’t the biggest threat to their business.

Property118 “The Landlords Union” launched a survey of landlords within minutes of the Chancellor delivering his Autumn Statement. Nearly 500 landlords responded within 18 hours and the results are still coming in fast.

Initial findings are that 53% of landlords intend to sell rental properties as a consequence of there being no repeal of the legislation introduced by George Osborne to disallow mortgage interest as a legitimate business expense for private landlords only. The poll also shows that 81% of landlords are planning to increase rents to pay the additional tax or to fund the costs of restructuring the ownership of their business.

It is reduction in the supply of rental properties that will hit letting agents hardest, NOT their ability to pass on fees to landlords.

Property118 Survey

Link to survey and live results.

Extra commission earned from even higher rents caused by the tax changes might help to offset the loss of fee income for agents but it is the number of properties they will have available to rent which should be worrying them most. Agents also need to realise that scope for landlords to increase will also be under pressure from April 2017 when the passed removal of finance costs as a legitimate business expense is removed. Passing on extra costs to landlords issn’t really an option for agents as this will merely encourage landlords to shop around for better deals.



Comments

Gary Nock

15:51 PM, 25th November 2016
About 3 years ago

And for me it fundamentally changes the relationship between the agent and the tenant. By paying fees they were a client, and ( contrary to what some people think) I had the interests of both the tenant and the landlord at heart. For example I use a referencing company. The tenant pays me a fee and then they fill in the referencing online. Prior to that I would pre-check their income, employment status etc to make sure they would pass so I didn't waste their money. Now the only client is the landlord. I no longer have no loyalties to the tenant. He doesn't pay my wages. He might pay the landlord - but the landlord pays me.

Kelly Joanna

16:13 PM, 25th November 2016
About 3 years ago

Reply to the comment left by "Dr Rosalind Beck" at "25/11/2016 - 15:43":

Yes totally agree! Some estate agents have started to charge purchasers a fee for purchasing sealed bid/auction properties. It always used to be that the seller paid the auction fee. Nearly fell off my stool when I saw a local estate agent wanted 3% of the sale price or £5000 whichever was greater, or such like figures. At the end of the day, we are a very small organisation, all very much working class. We charge a modest tenant fee of £150 for the first adult and £50 for additional s. We do not charge separate 'inventory' or 'contract' fee's. Won't don't charge for renewals or outgoing visits. Thankfully, as we charge so little we should be able to suck it up. The greedy corporate and larger chains will suffer the most so it may work in our interest but I am understandably skeptical where this leaves us after 5 years of building a trusted company...in fact, when I worked for a corporate chain, they actually said, the more I could charge tenants in going, the more commission I would get. Left after 6 months to start our company. Completely immoral practice which has ruined it for honest agents.

Gary Sewell

16:08 PM, 26th November 2016
About 3 years ago

The more I read up on the incoming changes the more I dispair, initially I wasn't too concerned as I am not a higher rate tax payer, but it looks like I soon will be.

It looks like I will soon be running a charity to house the homeless free of charge, it may actually cost money to home 13 family's.

I think I am going to have to start selling my portfolio, which I really didn't want to do.

What a nightmare.

Gary Nock

18:19 PM, 26th November 2016
About 3 years ago

You don't know what youv'e lost till its gone. Remember that Osborne, May and Hammond.

Chris Daniel

0:19 AM, 27th November 2016
About 3 years ago

I think Ros has a point you know.
Can't the Estate Agents bodies seek Legal Opinion on a challenge, I'd love to see the Govt get a 'bloody nose' over some aspect of their treatment of the PRS, Even if it wasn't over Sec 24

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