Autumn Statement discussion

always_sunny

Miss_Samantha wrote: »

And then tenants will continue to "be scalped", just perhaps in a slightly different way. People should really see beyond the tip of their nose.

So the choice is the tenant pays the fees upfront or pays them as part of the rent.
These fees are still paid by the tenant.

It's MUCH better to have them as part of the rent cause then LL will need to be transparent in their proposition and will force them to shop around to lower it.

i.e. 1 bed flat at £500pcm with £500 in fees is really £541pcm and should be advertised as such.
(£500pcm * 12 = £6000+500 fees = 6500/12 =£541pcm)

If £541 is too high for the property, the LL will need to cut cost and if £500 is made up of 'fluff', the LL will shop elsewhere to find it cheaper in the same way they do to find cheaper finishing, furniture, etc.

Miss_Samantha

Bluebirdman_of_Alcathays wrote: »

As a result of what? The office burning down? A biblical plague? The bad ones would go out of business - that's competition.

Let's be serious a for a second.

The cheapest agents are not the best ones.

In addition there usually aren't that many agents in a given location, if one goes out of business that means a stronger position for the remaining ones and therefore indeed less competition.

Crashy_Time

Miss_Samantha wrote: »

England has some very hot spots for rental and many private landlords do not actually aggressively track the market in term of rent level.

What happened in Scotland is not necessarily a good reference for what will happen in, say, London.

Also, you should not be had by the headlines. Landlords may recover the £500 this will cost them by only a moderate rent increase, especially where rents are high.
So no 'significant rent increases' but tenant end up paying the same as they did when they had to pay fees upfront.

And again, at the end of the day this can only reduce supply which will make it even more difficult for tenants.

Many tenants will leave the UK as they don`t like the new direction of Brexit etc. and their HB which allows them to live here will soon diminish as well. The main people getting hurt here will be BTL landlords who saw none of this coming.

mrginge

Miss_Samantha wrote: »

And then tenants will continue to "be scalped", just perhaps in a slightly different way. People should really see beyond the tip of their nose.

The government is simply in the sh*ts and is throwing crumbs away to mask the big picture.



It won't increase competition.

It may lead to a reshuffle and some agents might go out of business: When the dust settles there will be less competition.

Rubbish.

It will increase competition because it prevents agents masking their true costs by loading it directly onto the tenant.

It's the equivalent of a distributor offering a lower cost to Asda and then sending me a bill when I go and buy a tin of beans.

If agents costs are valid then they will be passed on to landlords who will then pass them onto tenants.
The difference is that that is paid over the term of the tenancy through marginally higher rents rather than higher up front costs that block mobility and disincentive tenants from moving.

The only people who are against this are agents who don't want to have to justify their costs and like an easy target profit stream , and slum landlords who prey on their poor tenants because they can't afford to move. Which one are you?

Pixie5740

Miss_Samantha wrote: »

England has some very hot spots for rental and many private landlords do not actually aggressively track the market in term of rent level.

What happened in Scotland is not necessarily a good reference for what will happen in, say, London.

Do you not think that Scotland has rental hotspots in cities such as Edinburgh? In fact until recently property prices and rents in Aberdeen were rising faster than in London due to supply and demand.

Miss_Samantha wrote: »

Also, you should not be had by the headlines. Landlords may recover the £500 this will cost them by only a moderate rent increase, especially where rents are high.
So no 'significant rent increases' but tenant end up paying the same as they did when they had to pay fees upfront.

If the costs are absorbed into the rent then tenants will only be paying those increased costs once they have secured their new home. None of this parting with £££ in the hope that you will pass whatever hoops the letting agent wishes you to jump through first.

Besides, not all landlords use letting agents. There will be a market cap on how much a particular size and style of property in a particular area can be rented out for with or without the changes to letting agency fees.

Miss_Samantha wrote: »

And again, at the end of the day this can only reduce supply which will make it even more difficult for tenants.

Reduce supply of what? The number of letting agents? Only the fit will survive as with any business.

Reduce the supply of rental properties? I don't think so. Would landlords start selling up because of this new policy?

Crashy_Time

BarryBlue wrote: »

Absolutely right. Also, I fail to see how banning letting fees will benefit prospective tenants either. If fees are dumped on landlords it will mean they will be passed on through increased rents. I use an agent for my properties and am very satisfied with the cost and service. If anything changed, of course I would shop around, but increased costs mean increased rents as sure as night follows day.

I'm afraid these plans by the hapless Hammond are typical of the government, who do no more than tinker at the edges to try an look like they are doing something. Nothing will change without a massive house building programme over several decades, so BTL is still looking a sound investment.

And as sure as selling up follows new tax liability increased rents mean increased voids. They scrapped agents fees in Scotland years ago, and rents went nowhere. Most London rent is set by HB levels, and that is surely under pressure now as well?

Miss_Samantha

Pixie5740 wrote: »

Do you not think that Scotland has rental hotspots in cities such as Edinburgh? In fact until recently property prices and rents in Aberdeen were rising faster than in London due to supply and demand.

Oh so there are significant rent increases after all...

WibblyGirly

I don't think they need to be banned (though as a renter this would be a dream) they do need to be more realistic and regulated though.
In my city I actually checked out what letting agents charged for fees before I bothered looking at houses. The one I went with charged £440 for everything but some others were over £600 with check in, inventory and exit fees etc. I get charged £60 for new contracts too but at the last renewal I asked for a longer one of 16 months to fit in with my plans which the agency were a bit off with but did agree it. Probably because they don't get another fee at the 12 month point.

[Deleted User]

Miss_Samantha wrote: »

Also, you should not be had by the headlines. Landlords may recover the £500 this will cost them by only a moderate rent increase, especially where rents are high.
So no 'significant rent increases' but tenant end up paying the same as they did when they had to pay fees upfront.

This is wide of the mark for three reasons in my opinion. The first is that this scenario is actually an improvement on the current system even if the rent increases are exactly the same as the fees currently being charged. The cost to the tenant is identical (so nobody is losing out) but the fees are posted upfront as part of the rent and it's far easier to shop around knowing what you're going to get. What typically happens at present is tenants choose where to live based on the rent, find out it's going to cost them £300+ in fees, and then they pay these fees because they feel like they don't have a choice.

Second, individuals who move frequently are highly disadvantaged under the present system. Letting agent fees effectively act as a barrier to people moving to different properties. You not only have to deal with the practical hassle of moving, you also have a one off £300+ (some agents charge "check out" fees as well of £100 or more) to add to the bill. If all of these fees are simply added to rent then there is no barrier to moving. That's another improvement.

Third, and most importantly, you're operating from the assumption that these fees are fundamental running costs that have to be recuperated one way or another. What they actually are is a product of an under-regulated market that allows businesses to charge over the top rates for services that can be achieved far more cheaply. Market forces will eliminate those fees that weren't necessary from the system and drive down prices for everyone. That's precisely what happened in Scotland and I see little reason why that won't happen here so long as all of the loopholes are removed from the relevant legislation.

Pixie5740

Miss_Samantha wrote: »

Oh so there are significant rent increases after all...

Not because letting agent fees are unlawful but because huge numbers of people were moving into Aberdeen. The serious price hikes happened long after letting agents were no longer able to charge tenants fees. Hence why the cost of buying houses also soared.

The price of oil has fallen reducing demand and so rents and property prices have no fallen.