Whether you’re a professional landlord or own a couple of rental properties to help boost your finances, staying abreast of the changing rules and regulations within the sector is crucial if you want to protect your income. In the coming years, a number of reforms will come into effect, many of which will have a significant impact on the way you run your rental business.
Of these reforms, one of the most important is the proposed ban on lettings fees. Affecting all landlords who use a letting agent, these new rules could have a serious impact on your income.
The proposed changes to letting fees were announced in last years Autumn Statement and mentioned again in the Queen’s speech in June. The idea behind the changes is to reduce the cost of renting homes in the UK by banning agents from charging fees. Instead, tenants will pay only their rent and a refundable deposit. All other charges will be passed on to the landlord of the rental property.
It’s hoped the ban will help encourage agents to be even more competitive and provide a high quality service for landlords across the board. As well as a ban on fees, the Government is also considering a cap on deposits of one month’s rent. Although this could be a good for renters, it may put landlords off renting properties to higher risk tenants.
Who will it affect?
These changes will affect all landlords who use agents to manage their rental properties as well as those who charge their tenants fees via direct lettings agreements. Although it remains to be seen exactly how the fees ban will impact on the rental market, the changes are unlikely to have a significant impact on agents themselves.
Surprisingly, although the ban on lettings fees will affect almost all landlords, research from No Agent has revealed that more than 25% of landlords didn’t know about the proposal. In fact, the survey showed 31% of landlords we completely unaware of the proposals while 14% were only ‘vaguely’ aware.
What will the impact of the fees ban be?
The likely impact of the ban on lettings fees is an increase in rental costs for tenants. Most landlords will look to offset their increased expenses by putting up the monthly rent in order to avoid losses. With the number of households living in privately rented accommodation expected to increase from 5.4 million in 2015 to 7.2 million in 2025, this could have serious ramifications for many people in the UK.
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