Letting agents are anticipating rent increases in 2017 ahead of the tenant fees ban.
ARLA’s November Private Rental Sector Report found the number of tenants experiencing rent increases continued to decrease, at 16%, from 18%, but this could all be set to change.
Following the Chancellor Philip Hammond’s announcement to ban letting agent fees for tenants during his Autumn Statement, eight in ten agents expect to see rent hikes in 2017.
The report found the number of rental properties managed per branch was 185, an increase from 180 in October, but lower than the 193 recorded in September.
Demand from prospective tenants fell again in November to 32 prospective tenants registered per letting agent branch, compared with 34 in October, however 53% of agents expect to see a rise in demand next year.
David Cox, managing director of ARLA, said: “The number of rent hikes reported by letting agents continued to decrease in November, and it’s a shame the ban on letting agent fees will have the opposite impact on rent prices when the measure comes into force.
“The buy-to-let market is becoming less attractive for investors as the ban on fees, combined with the scrapping of mortgage interest relief and the stamp duty increase on second homes push costs up for landlords. So unfortunately, regardless of the uplift we saw in supply this month, we expect to see the number of properties available to rent fall next year.”
David Cox – it’s a “Shame” on the ban of letting fees….. Now there fighting talk… would not want to confront him this Christmas after a Sherry….
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Well his last comments of “draconian” wasn’t received well so he can’t win no matter what he says can he? Either way you can’t please everyone. Not that the government listen to anything that’s advised by the experts.
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Rent will not increase if demand is low. The likihood of the ban is the closure of offices and lost of ARLA members. ARLA needs to do more than repeat the same rhetoric.
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Of course they won’t, after all they didn’t rise in Scotland did they?
https://homelet.co.uk/news/article/Rent-rise-fears-eased-for-landlords-and-tenants
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Who knows what might have happened to rents in Scotland if the fees ban hadn’t been there? Maybe they would have dropped. WIth all the attacks on the PRS (this one included) there are of course landlords leaving, yet the demand for rental properties continues with an upward trend. So, yes, rents have to rise. Nobody wants this but it’s a direct result of Government interference.
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My point is that during the debate for the renter bill amendments they asked for evidence to the contrary and no-one highlighted this research…
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No they didnt, according to shelter
banning tenancy fees Won’t raise rents.
Rents are determined by supply and demand
time to get used to it
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Demand for rented property will likely continue the same or increase.
Supply of rented property will continue to decrease as fewer landlords enter the sector and those landlords already in it, start to leave for alternative, and perhaps less risky, assets.
Inevitably this will increase rents – not just the ban on upfront fees from letting agents.
The Government will legislate to ban letting agent fees for tenants – Not because it’s justified but because there are a lot of voters who are tenants.
If landlords have a choice of applicants and cannot charge them a fee for their application, landlords will expect tenants to be pre-referenced & pre-qualified prior to their applying for a tenancy. They will need to have an independently verified Tenant Information Pack to support their bid for the tenancy – yes, a bid for their tenancy.
For the majority of landlords, the applicants that have the highest bid, the strongest supported information and can commit by signing a tenancy in the shortest time will be successful. The less well off and less well qualified will not, and will inevitably be forced to look to the cheaper, lower quality, unregulated end of the market.
Provided that the tenant is verified, the landlord will take out rent protection insurance should the tenant who provided the highest bid not actually be able to afford it. If there are problems, the insurer will pursue and evict the tenant and their chances of securing a future tenancy will be close to zero.
hmmm. who wins in all this ? anyone ?
The answer. Fees to tenants (whether by landlord or agent) need to be regulated, not banned. As with most of the private rented sector there is already sufficient regulation for this, it just needs enforcing. Tenants and Government need to get over the mindset that tenant fees are double charged landlord fees. They are not. Tenant fees are their share of the overall cost of establishing the tenancy and, in the majority of cases, contribute towards a fair and legal tenancy agreement and a comprehensive inventory – both of which are as much for the benefit of the tenant as the landlord.
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Rents will only go up if letting agents allow them to. Don’t be scared…..educate your landlords, stand your ground and don’t allow it to happen. But of course most letting agents will allow it to happen through either inexperience or fear of the landlord and possibly loosing business.
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So you would spend time working for nothing! Nonsense idea.
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If you are an agent I hope to Professional Indemnity insurance is up to date if you are advising your clients to let their property.at below market rates. You will also attract to worst tenants who seek something for nothing. Still with your proposed policy I doubt you will be in business this time next year.
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I sincerely hope rents increase to prove the futility of the ban!
ARLA though…I am sure the 2nd ‘A’ means something else!!
Any guesses what I think the word is!!?
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I think it stands for Arbitrators as that’s what letting agents essentially are.
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Market supply and demand will always be in control, not agents or Government unless they cap rents. Firstly agents will want to charge for time spent just as any of business is entitled to, therefore the Government may find a judicial review could thwart their attempts in the private sector if stakeholders push for it. We are not talking over charging here. Secondly most landlords will not cover the same costs if passed to them, they will put up rents, there is nothing to stop them …. unless rent capping comes in. Then there will be a war with council of mortgage lenders, insurers and law society as the current market would be thrown into anarchy.
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I don’t think we are going to see this sharp rise, rents have fallen due to seasonal changes and then if rents are too high people will just stay where they are for longer, the ban is negative for agents, not just because its an income stream but because you often work damn hard to get these deals together and followed through in short spaces of time meeting everyones demands and no one sees that on the outside and perhaps thats our fault, but if it softens the rent rather than letting it rise further, then perhaps people will move more creating more “new” oppotunities and stimulating the sales market for investors struct by so many financial changes.
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