12 October 2017
Housing Minister Announces Planned Ban on Letting Agent Fees
Within new Housing Minister Alok Sharma’s debut speech, he allayed fears for landlords relating to potential caps in high-rental locations. However, his first official statement revealed that White Paper plans for a ban on letting agent fees tempered the warmth of his reception by the industry.
When new Housing Minister Alok Sharma announced he was ready to deliver his first speech since taking up the position, the industry responded with limited enthusiasm. As the sixth gentleman to hold the position since 2010, Sharma inherits a complex legacy. With a political background showing consistent support for cutting welfare and benefits for low-income tenants, Sharma’s debut speech was considered to be wholly predictable.
While Sharma’s announcements at the recent RESI conference didn’t meet with overwhelming enthusiasm by landlords, it did allay some fears which have been growing since the publication of the White Paper on rentals which was released in March.
A lacklustre debut speech
Sharma confirmed that the proposals from the March White Paper will go ahead, meaning that England will see the anticipated ban on letting agent fees being introduced to legislation. Scotland pioneered the ban, leaving most landlords to assume that it was only a matter of time before England followed suit.
Looking to Scotland, landlords also expected to hear confirmation that there would be a proposed cap on rents. As Sharma delivered his speech, Glasgow Councillors were casting their vote to make tenancies more affordable through imposed controls. Scottish legislation will provide Councils with the jurisdiction to assign areas as ‘pressure zones’ of high rental within the private sector, and implement an imposed cap which cannot exceed 1% above the rate of inflation.
However, despite the climate indicating that England would also be pursuing a rental cap, Sharma stated that there were no plans to adopt similar measures by the current Parliament. The announcement has left landlords in high-rental areas such as Esher, Oxford and York sighing with relief, as it means that the healthy market for rentals looks set to continue.
Lettings Index Shows Rental Market is Thriving
Despite the impact of the current political climate on the economy, the rentals industry continues to go from strength to strength. The latest report from the Lettings Index indicates that on average, rents nationally increased by almost 2.5% this year; the highest annual inflation rise experienced for the industry since November last year.
The Index suggests that there is a positive upward trend for the property market, driven by high demand for housing coupled with reductions in the number of available properties to rent. This will come as further welcome news for the industry, as lending criteria becomes tougher for landlords, and inflation rates increase financial pressure on landlords with mortgages.
At a time of economic uncertainty and the introduction of stringent legislation, it seems that Sharma has sweetened his speech with an unexpected detour away from Scotland’s precedent for the industry.
