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Letting agent fees charged to tenants scrapped in Autumn Statement

Abul Nurujjaman, 



Chancellor Philip Hammond has banned all upfront letting agent fees charged to tenants during his first Autumn Statement. Hammond said: “In the private rental market, letting agents are currently able to charge unregulated fees to tenants. We have seen these fees spiral, often to hundreds of pounds. This is wrong. Landlords appoint letting agents and landlords should meet their fees.” “So I can announce today that we will ban fees to tenants as soon as possible.”

 

 

 

Scotland has already banned letting agent fees for tenants.

It seems that this ban will result in landlords facing increased costs such as picking up the bill for referencing fees with agencies also potentially absorbing some of the admin costs. It may be the case that landlords look to recover their incurred costs by passing them back to the tenant through increased rents.

 

It may also be the case that landlords, who have already been hit by cuts in mortgage relief rate and a stamp duty increase of 3% on buy-to-let properties, may decide to cut their losses. This could lead to a shortage of rental properties and again we could see rental prices go up.

 

From the above analysis the picture does not look ideal for agents, landlords or tenants. However, there are some positive developments taking place which could help the situation such as help for landlords announced in the 2016 Budget in the form of two new income tax allowances of £1,000 each for trading and property income. Individuals with trading income or property income below the level of the allowance will no longer need to declare or pay tax on that income. 

 

In addition, it should be noted that landlords may be able to deduct any additional costs they face from their income to make some tax savings. Furthermore, the Personal Allowance is set to rise from £11,000 to £11,500 in 2017 and Corporation Tax is set to be reduced from 20% to 17% in 2017 which again may help landlords to make tax savings.

 

 


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