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Rental market in Scotland ‘remains in good shape’ despite ban on fees

It is currently a challenging time for letting agents, following a raft of changes introduced by the government prompting concern that fewer homes will come onto the market, as vast numbers of landlords will be forced to exit the sector, restricting the level of housing stock agents have to offer.

The current phasing out of mortgage tax relief, coupled with the introduction of more stringent buy-to-let mortgage lending conditions as the Prudential Regulation Authority seeks to cool existing lending practices in the sector, will inevitably push some landlords out of the market.

There has already been a sharp decline in the volume of buy-to-let valuation instructions since the introduction last year of the 3% stamp duty surcharge on additional properties in April last year and the scrapping of the 10% ‘wear and tear’ tax relief for landlords who rent out furnished homes.


Another major issue that private landlords in England - and possibly Wales - may soon have to contend with is that of addition letting agency fees.

The government’s plan to outright ban letting agents’ fees to tenants was clearly designed to shift the costs to landlords. 

But the proposed ban on letting agent fees is widely viewed as a draconian measure within the letting industry which will have an adverse impact on the rental market, as it may impact on who pays for a range of crucial administration, including reference, credit and immigration checks, as well as the drawing up of tenancy agreements.

If fees are banned, these costs may be passed on to landlords, who will need to recoup the costs elsewhere, inevitably through higher rents.

It could be argued that the banning of fees will end up hurting tenants the most, which are the very people the government intends on helping the most, as buy-to-let owners respond by passing on higher costs to tenants through rent rises.

However, automated rental payment provider PayProp insist that it is ‘not all doom and gloom’, and urges people to look at the rental market in Scotland, where there is already a ban on upfront letting agent fees charged to tenants.

Neil Cobbold, chief operating officer of PayProp in the UK, commented: “Fees have been banned in Scotland since 2012 and the lettings market north of the border remains in good shape.  

“The ban on letting agent fees is all about a changing market and effective adaptation.”

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  • John Gell

    It's about professionalising the sector.

    Tenant fees give rise to a conflict of interest, as the landlord is an agent's client, and also facilitate a "low fee" sales pitch to landlords (which often equates to low service) financed by fees charged to tenants who are in no position to resist.

    Fees have been unlawful in Scotland since the 1988 Housing Act, and the 2012 review simply upheld that position.


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