The Chancellor delivered his Autumn Statement last week, and while Phillip Hammond painted a poor outlook for the UK’s work force, there was some positive news for the property market. Let’s take a look at the key points that affect us.
The Chancellor announced a ban on letting agent fees, which have spiralled in recent years to put an unfair burden on tenants. 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.”
Although many letting agents feel that this is unfair, it does seem that there is indeed a problem when the current system can see tenants charged up to £650 just for the privilege of signing a letting agreement.
The head of the Association of Residential Letting Agents (ARLA) has warned that agents will simply increase their landlord charges, which may see a rise in rents to cover the costs.
However, improvements in regulation can benefit the buy-to-let market, as tenants will have greater confidence in the rental system. Agents that are charging reasonable rates should experience no negative effect following this change, and for landlords this has an additional advantage – agents will become more competitive and more customer focussed, which will further improve customer confidence.
Great customer confidence will see a rise in rental agreements, which means more competition and higher rents. It is likely that tenants will end up paying more, and more of it will be paid to landlords.
Better Land for Development
The Chancellor also announced that the government will invest in major infrastructure projects to help improve the quality of housing developments. Developers have complained that a lack of quality infrastructure in the form of roads and facilities makes selling new homes difficult.
There has been a rise in off-plan property investment, both from domestic and overseas investors, since the Brexit vote. This news will likely trigger new building projects.
A Brighter 2017
Although the Autumn Statement carried a fair amount of bad news, the Chancellor has decided that house building should play a major role in economic recovery. A change in the letting laws and a promise to improve the infrastructure surrounding housing developments is great news for the property market, and property investors, landlords, letting agents, and tenants, should all benefit from these changes.