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Autumn Statement: “Letting fee ban won’t help JAMs’”

• Property boss: “I’m not convinced the best way to help people who are just about managing is to raise their rent”
• “This move has been on the cards for some time and as letting agents we only have ourselves to blame for not responding to the threat. If more agencies had moved over to deposit-free renting they would have slashed move in costs for renters by up to a third and perhaps we wouldn’t be in a position now where there may be job losses to balance the books.”

A leading property expert has responded to a ban on letting agent fees announced in this afternoon’s Autumn Statement – warning that rents may rise as a result.

Ajay Jagota of North East-based sales and lettings firm KIS compared the move to a monthly payment store where renters “pay less up front but far more over time”.

But the creator of deposit-free renting solution Dlighted also believes letting agents should bear some of the blame for the announcement by failing to respond to the threat of a fee ban due by voluntarily reforming tenancy deposits – saving the average UK renter £1300.

Speaking in his first Autumn Statement as Chancellor, Phillip Hammond announced plans to ban letting agents from charging fees to tenants for services such as immigration checks and credit referencing, arguing that the move will save 4.3m households “hundreds of pounds”.

Rents appeared to rise sharply in Scotland after a ban on letting agencies charging fees to tenants was introduced in 2012 – rising by more than 6% in some areas.

In September, housing minister Gavin Barwell MP described a letting agent fee ban as a “bad idea” - arguing that “landlords would pass cost to tenants via rent”

Ajay Jagota of North East based sales and lettings firm KIS Group and deposit-free renting solution Dlighted responded to the speech:

He said:

“The Prime Minister has spoken quite rightly about the need to help families who are ‘just about managing’ – but as attractive as it might sound, a ban on letting agent fees could actually make their lives more difficult.

“Loss of revenue for agents will inevitably be made up by passing those on to landlords in fees, making rent rises inevitable in turn. That certainly seems to have been the case in Scotland where some rents rose by more than 6% when a similar ban came in.

“Think of it as being like buying from a monthly payment store – you pay less up front but pay far more over time than you otherwise would have.

“The devil will be in the detail, of course - and ‘as soon as possible’ could mean anything - but my instinct is to agree with Housing Minister Gavin Barwell, who just weeks ago described a letting agent fee ban as a ‘bad idea’. I’m not convinced the best way to help people who are just managing is to raise their rents.

“We all want to making renting cheaper, but a far better way would have been to reform tenancy deposits and replace them with insurance policies. By doing that you could save the average UK renter more than £1300 in move in costs without pushing up their rents.

“This move has been on the cards for some time and as letting agents we only have ourselves to blame for not responding to the threat. If more agencies had moved over to deposit-free renting they would have slashed move in costs for renters by up to a third and perhaps we wouldn’t be in a position now where there may be job losses to balance the books.

“Labour was promising a letting agent fee ban at the last election. The Liberal Democrats, The Greens and even Conservative backbenchers have called for it too.

It’s not as if it was some big secret that this was on the way if the industry didn’t get its house in order.“

Other housing relating announcements in the Autumn Statement include £1.4bn extra funding for 40,000 new homes and increased flexibility in the government’s Affordable Homes Programme, allowing for greater use of Rent to Buy, where prospective buyers pay a discounted rent for five years while saving for a deposit.

This was posted in Bdaily's Members' News section by Ajay Jagota .