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Autumn Statement: Estate agents hurting ahead of Hammond letting fees ban

Share prices in some of London’s biggest estate agents took a big hit in early trading yesterday after it was revealed in the Autumn Statement that the Chancellor is planning to ban letting agency fees for tenants.

Leading the fallers was estate agents Foxtons, which saw its share price plummet 12% early on amid investor fears that revenue at the capital’s estate agents will be significantly hit by the changes.

The Chancellor, Philip Hammond, revealed the clamp down on letting administration fees, which can spiral into hundreds of pounds, in an attempt to lessen the burden on the so-called ‘just about managing’ families.

In the past, Foxtons has been accused of particularly punitive administration fees, while Labour’s City Hall Housing Spokesperson, Tom Copley, has claimed on Twitter that the estate agents charge an average of £420 in letting fees compared to an industry average of about £230.

Londoners in particular stand to benefit from the ban as they face some of the highest charges in the whole of the UK.

Predictably, the move has been criticised by housing industry figures who claim that private tenants will inevitably shoulder the financial burden of the ban, as letting agents and landlords transfer the added expense into higher rents.

Analyst Anthony Codling at broker Jefferies International commented: “Our view is that it would not be logical to ban fees outright, for instance inventory checks are usually outsourced to third parties and used to safeguard both landlord and tenant, perhaps these fees should be split.

“Credit referencing fees: we think it fair that tenants can demonstrate that they have the ability to pay the rent.

“Where fees are possibly unfair are, for instance, blanket fees of £300 to set up a standard tenancy agreement or a £60 additional charge to move in on a Saturday, such fees we believe generate high margins for the agent at the expense of the so called JAM tenants (Just About Managing).”

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