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Hammond confirms fee ban - and no change to buy to let tax or stamp duty

Phillip Hammond has delivered his first Autumn Statement, tackling amongst other things, what he called “the housing challenge.”

The speech made no reference to stamp duty, nor to George Osborne’s buy to let tax reforms despite substantial lobbying from the agency industry; it is assumed that these remain unchanged.

Aside from a ban on lettings fees levied on tenants - of which more later - the biggest property-related announcement in the statement was for new housing.

“We’ve made good progress on the number of new homes” said Hammond, ahead of his announcement that in addition to the already-agreed £3 billion Home Builders Fund he would launch:

- a £1.4 billion funding injection aimed at funding the construction of around 40,000 additional affordable homes by 2020/21;

- a £2.3 billion fund to “unlock land” for housing in areas of highest demand with the most expensive homes;

- relax planning regulations to allow what the Chancellor called “providers’ to build a wider range of new-build homes;

- specifically for London, Hammond said there would be an additional £3 billion for a predicted 90,000 affordable homes.

The Chancellor also confirmed that there would be a housing White Paper coming from the Department of Communities and Local Government - but no date has been given for its arrival, and some political analysts have suggested that this means it is delayed beyond its expected target of being issued before the end of this year.

Hammond described this package of proposals as delivering “a step change in our ambition to increase our supply of homes for sale and for rent.”

There was also an announcement that there would be a review into incorporation and tax paid as a result: no details were given, but this may be a challenge to landlords who have gone down the route of setting up companies for their buy to let properties in a bid to combat the restrictions on mortgage interest tax relief being introduced from April 2017. 

Towards the end of his speech, Hammond confirmed the move on banning letting agents’ fees levied on private rental sector tenants in England. The government says this will apply to some 4.3m tenants, saving a government estimate of £337 in fees for each tenant.

“Letting agents are currently able to charge unregulated fees to tenants” said Hammond, who described the most excessive fees as “wrong.” He said this ban would come into effect “as soon as possible” - likely to be after a consultation period.

The rest of the Autumn Statement includes these measures:

- three new ‘fiscal rules’ suggesting the deficit will not be paid down until 2025, with tax revenues lower than expected;

- corporation tax to fall to 17%; the lowest corporate tax in the G20;

- Insurance Premium tax up from 10% to 12% in June 2017;

- no further welfare spending savings in this parliament;

- National Living Wage to rise to £7.50 from April 2017;

- £740m for the development of 5G and the continued roll-out of fine-optic connections;

- £2 billion annually for research and development funding from 2021;

- fuel duty rise cancelled for the seventh successive year;

- reform of compensation for whiplash to be limited to ease pressure on motor insurance;

- future Autumn Statements abolished, so from autumn 2017 there will be only one annual Budget.

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    Is it just going to be a ban on letting agents charging fees or landlords too?

    We have several landlords who draw up their own contracts and charge the tenants for these.

    We don't charge admin fee's to tenants, we just charge for referencing and drawing up the tenancy agreement.

    We don't charge tenants for lodging or releasing security deposits or providing a reference if they move on. This cost for lodging the deposit is paid by the landlord. We charge a check out fee to the tenants if we do a check in (paid by the landlord).

    I know some agents charge landlords a lower fee to win the instruction to then make up their money from charging tenants more, as discussed before, if they like the property, they cant shop around for the best price, as properties usually only on with 1 agent.

    I believe the fee's charged to tenants should be regulated, maybe a flat fee for carrying out reference checks for tenants - say £50.00-100.00, tenancy preparation fee £100.00-150.00 per property and check out fee's if applicable and a renewal fee if the agent draws up a new agreement of around £100.00.

    If there is a total ban on fees, agents will have no choice but to pass the costs on to the landlords, as we are businesses, not charities and need to make money. This will increase rents and make the poorer sections of society worst off.

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    This is a classic case of the few idiot agents in the lettings industry spoiling it for the good, honest agents that charge fair fees for the work and effort required to source good tenants for Landlords. This will not help. The solution is to apply a cap to fees.

  • Spencer Fortag

    It will certainly be interesting to see which fees are banned. Hopefully this will just be another, ill-thought out government idea that actually does not come to much.

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    Croydon Agent - Eats Shoots & Leaves by Lynn Truss - read it! It's FEES not FEE'S - it's plural not possessive, if you understand? Poor English rears its ugly head again.

  • phil dillon

    Incredible, not a word on Mortgage Tax Relief, Stamp Duty, CGT. Only more grief for Landlords.
    OK, if HMG want Private landlords to Exit the system/Market give them an opportunity !!

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