New legislation looks to create a more transparent lettings market
By Will Leyland, 21 September 2017
Following on from tax changes last year which meant that tax relief was removed from mortgage interest for buy-to-let (BTL) landlords, government ministers are once again reiterating that will be a ban on letting agents fees in the coming 18 months.
Housing minister Alok Sharma, on Friday, confirmed that the plans would go ahead. Many are rightly sceptical about the announcement, however, as there was no specific timeframe or plan announced, simply a rehashing of an announcement made by chancellor Phillip Hammond in the Autumn Statement last year.
Sharma – who is also planning minister – was speaking at the Resi Conference in Newport, South Wales, as reported by Letting Agent Today. He said “The Government wants to see all tenants receiving a good, fair and affordable service from landlords and letting agents.”
“So we will publish a Bill to ban letting fees paid by tenants in England.” He continued, “I know many of you in the build to rent sector do not charge upfront fees to your customers. But a ban will help to deliver a more competitive, more affordable and more transparent lettings market across the rest of the sector. We are also committed to improving standards. In April we brought in tougher measures targeting rogue landlords, including civil penalties of up to £30,000 and an extension of rent repayment orders. These powers give authorities the tools to crack down on the minority of landlords who disregard the law and take advantage of tenants.”
Despite making what might have been considered a fairly strong speech, many agents and landlords condemned the speech as underwhelming and lacking in detail. Many observed the lack of any coherent plan behind the proposals and the already noticeable gap between the initial announcement and any planned action.
Sharma did go further, though, and touched on the recent issue of rent controls that have caused concern to some landlords. Sharma claimed that under no circumstances would rent controls be introduced under the current government, he pledged, “Let me be absolutely clear, under this Government rent controls are not going to happen.”
Despite this Property Industry Eye were, on Friday, reporting that rent controls in Scotland are likely and this could spark demand in other parts of the UK.
Reporting the issue, the website said: “There is a proposal to bring in city-wide rent controls in Glasgow, while Edinburgh is likely to follow suit.
In April the Scottish government announced that legislation would give councils powers to create rent controls in ‘rent pressure zones’. That power comes into effect in December and Glasgow SNP councillor Ruari Kelly has already put forward a motion to examine the feasibility of bringing in rent controls across the city.
It would mean rents would be capped for up to five years at the consumer price index plus 1%.
Cllr Kelly said the cost of private rents had risen 24% in five years, with the average rent in Glasgow now £755 per month.
Kelly said: “Rent pressure zones will give those in the private rental sector security in the knowledge that they will not have large increases in their rent sprung on them, while the city gets on with the task of building the affordable housing Glasgow needs. While this will not be the answer to all of the housing issues we face, it is a step in the right direction.”
Whilst this certainly does not constitute guaranteed controls being introduced across the UK, it may certainly worry some landlords operating in an already difficult atmosphere. With rents on the rise in much of the UK there is certainly an argument that controls may, at some point in time, need to be put in place in order to maintain the private rental market for tenants.
With many long term renters being hit with rent increases whilst wages remain stagnant it is conceivable that some measures may need to be implement to answer the issue. As the private rental market continues to grow, and many look to renting as a long term alternative to buying, it is important to make the private rental sector fair, transparent and controllable.
New legislation would not only benefit tenants, but also to support landlords who can be assured that they are invested in a stable and just market that can continue to grow.
New data from Knight Frank indicates a healthy rental market in prime central London
New data reveals a lack of knowledge surrounding current deposit protection laws
It is important to be up to date with current legislation in the rental sector - are you aware of the latest regulations?
A new bill is set to pass through Parliament which will give tenants greater rights when it comes to hazardous homes
The tenancy deposit cap has been reduced to five weeks rent