Letting agent fee ban to lead to rent rises in 2017
In its November report, its first since the Chancellor’s Autumn Statement, ARLA reported the number of tenants experiencing rent rises fell to 16% in November, down from 18% in October. However, this didn’t stop eight in 10 letting agents thinking that rates will rise next year as they go about coping with the prospective ban.
Meanwhile, following the increase in taxes for landlords, including Stamp Duty and Capital Gains Tax, a third (63 per cent) of agents said they expect the supply of rental accommodation to decrease in 2017.
This is despite an uplift in supply reported in November, with the number of rental properties managed per branch at 185, up from 180 in October. However, this was considerably lower than the level seen in September, when there were 193 properties managed per branch.
Demand from prospective tenants also fell again in November, as the rental market continues to cool ahead of Christmas; 32 prospective tenants were registered per letting agent branch, compared to 34 in October. However, more than half (53 per cent) of agents said they do expect to see a rise in demand next year.
“The number of rent hikes reported by letting agents continued to decrease in November, and it’s a shame the ban on letting agent fees will have the opposite impact on rent prices when the measure comes into force,” commented David Cox, managing director of ARLA.
“The buy-to-let market is becoming less attractive for investors as the ban on fees, combined with the scrapping of mortgage interest relief and the Stamp Duty increase on second homes push costs up for landlords. So unfortunately, regardless of the uplift we saw in supply this month, we expect to see the number of properties available to rent fall next year.”