While there is a lot of support for helping first time buyers get on to the property ladder, there hasn’t been the same level of support and backing for people looking to rent property. The cost of buying a home is well known and stated but equally, there are many costs associated with renting property. Tenants usually have to offer the first month’s rent up front, they need to pay a deposit and then there is the issue of letting fees.
While the average level of letting fees has been listed as £223, there is evidence of tenants paying a lot more. Many different services can be placed under the letting fee agreement, and this is when the costs start to add up quickly. Some sources have said that they have seen examples of a new agreement costing £300 to print out and administrative costs of £200 for simple tasks. These are all fees that can impact on a tenant’s ability to obtain a property, and this is why there has been a positive reaction, from some quarters, about the Government’s plan to stop letting fees be imposed on tenants.
Letting fee ban may not happen until spring of 2019
First of all, this isn’t expected to happen until spring of 2019, so it isn’t going to change overnight. However, this change and a proposed cap on the deposit requested by landlords or letting agents will hopefully lower the costs faced by some tenants.
Of course, lowing the cost to tenants means that professionals in the industry will receive less money, and this is where a level of debate can be had about the effectiveness of a letting fee ban. There are some people who will argue that if letting agents lose one source of income, they will find a way to charge tenants in another way. It could end up that there is no real cost saving to be gained by tenants, and this is something that could cause problems further down the line.
Letting fee ban had no real impact on rental fees in Scotland
There are many opinions on this matter but a study undertaken by Shelter gives rise to optimism that there may not be much of a difference. This is because letting fees have already been outlawed in Scotland, and it would appear as though there hasn’t been much of a change, if any, in that market.
Anyone with fears that the letting fee ban would lead to a rise in rental fees will take this finding in a positive manner. There is also the fact that it is likely that tenants are at the ceiling of what they can afford to pay these days. Yes, all letting agents and landlords would like to generate more income from their work but if the money isn’t available, there isn’t really much that can be done.
If you have an interest in the letting market and would like guidance or advice on how these changes will impact on you, please get in touch with Geoffrey Matthew. We are always happy to offer advice and help that gives you an advantage and we look forward to hearing from you.