For many in the private rental sector (PRS), the Chancellor’s Autumn Statement was as notable for what wasn’t announced as for what was. Some in the industry were hoping, albeit a touch optimistically, for an indication that the stamp duty surcharge would be reconsidered.
Others thought the decision not to count mortgage interest as a legitimate business expense could be reversed. As it was, the main announcement of interest to the PRS was the banning of letting agency fees. This in itself was something of a U-turn by the government.
They had previously resisted the ban with even the Minister for Housing, Gavin Barwell, arguing until recently that the end result would be landlords simply passing on the cost to tenants through rent increases.
However, Philip Hammond argued that since:
“Landlords appoint letting agents, landlords should meet their fees.”
There had also been a sustained campaign by groups such as Shelter to have letting agency fees, charged for services including credit referencing and inventory checks, banned. The Association of Residential Letting Agents estimates the average cost of letting fees to be £202. Letting agent fees are already banned in Scotland.
Many in the PRS were still unconvinced by the government move, including National Landlords Association Chief Executive Officer, Richard Lambert. Whilst acknowledging that some unscrupulous agents have indeed charged excessive fees, he said the move will:
“Just add to landlords costs and on top of restricting their ability to deduct their business costs from their taxable income will only push more towards increasing rents”.
Managing Director of the Association of Residential Letting Agents, David Cox went even further saying the ban was:
“A draconian measure which will have a deeply negative impact on the rental market”.
The Chief Executive of the National Approved Letting Scheme, Isobel Thomson, thought the government should be looking for alternatives to an outright ban. She explained:
“We don’t believe banning fees is the answer. The majority of letting agency fees are reasonable and a fair charge for the service they provide”.
In contrast, the Chief Executive of Shelter, Campbell Robb, believed it was an excellent move, saying:
“It will make a huge difference to those scraping by in the unstable and expensive rental market”. Philip Hammond said the ban on letting agent fees will come into force as soon as possible.
In other news for the PRS, it was announced by the Chancellor that Insurance Premium Tax will rise 2% to 12% meaning property insurance will be more expensive from June 2017. The Chancellor also announced that £1.4 billion would be made available to build 40,000 new houses.
One other notable property announcement was the relaxation of government grant restrictions for building new houses. This will be especially good news for a number of developers such as Moda Living who specialise in designing and building rental developments.
There is still some hope that other measures previously introduced by the administration of David Cameron, such as the stamp duty surcharge, will be looked at again by the new administration of Theresa May. However, for this Autumn statement, there was not much for the industry to cheer about even if some hope for the future still remains.
By Chris Turner – www.whathouse.com
Reflections on the Autumn Statement https://t.co/cc8CkXtipg
— LandlordZONE (@LandlordZONE) December 6, 2016