Agents are currently paid lettings fees by tenants – an average of £223, according to government figures – to cover references, credit checks and potentially investigating an immigration status. It was initially proposed in the Autumn Statement, but the Queen’s speech yesterday (21 June) confirmed, that the Tenants’ Fee Bill will come into force later in the year, meaning that agents are no longer able to charge for these services.
The announcement is obviously good news for tenants – who are now being encouraged to carry out their own intendent references. Landlords will, however, lose out as they will now need to absorb this cost. This presents a barrier to entry and will make the purchasing of buy-to-let properties less attractive.
With fewer buy-to-let properties on the market – created through this barrier to entry – it’s inevitable to push rent prices up.
Agent lettings fees have already been abolished in Scotland, so it’s likely that we’ll see a similar property market structure filter down; it will be interesting to see how this progresses but the bottom line is that with demand set to further outweigh supply rent will go up.