x
By using this website, you agree to our use of cookies to enhance your experience.
STAY CONNECTED!
    
newsletter-button

TODAY'S OTHER NEWS

How the tenant fee ban is changing buy-to-let

The tenant fee ban is new to most of the UK, but has been in place in Scotland since 2012. Advocates of extending the ban throughout the rest of the UK pointed to the fact that rents in Scotland have not risen significantly in the intervening years.

While this may be true (depending on your definition of significantly), there are many differences between the housing market in Scotland and the housing market in the rest of the UK, particularly England.

Because of this, it might actually be easier and more accurate to set aside the Scottish housing market when considering what the tenant fee ban could mean for other parts of the UK.

The practicalities of extending the tenant fee ban

Not only does England have a larger population than Scotland, but, in much of the country, it also has much greater population density. This leads to increased demand for housing, especially rental housing and thus buy-to-let property investors who do remain in the market could well have more flexibility to raise rents than their northern counterparts.

They may also have more motivation to do so because one of the major differences between the Scottish housing market and the English one is that Scotland is exempt from the Right to Rent legislation, hence landlords can be more relaxed about setting up tenancies themselves and then using lettings agents for day-to-day property management.

Landlords in England, however, still have to think much more seriously about the personal liability they face if they either take in a tenant who does not have the “Right to Rent” or breach the Equality Act when undertaking “Right to Rent” checks. This may provide a compelling argument for continuing to use lettings agents and passing the cost on to tenants.

Landlords in England are selling up - sometimes fast

It’s also worth noting that many former buy-to-let property investors have exited the market over recent years and it seems likely that more will do so in future. While this exodus may not have been entirely caused by the prospect of the ban, it does have the impact of reducing the supply of rental property and/or reducing competition amongst landlords.

New research from Sellhousefast.uk looked at 10 of the UK’s key buy-to-let markets, namely Birmingham, Canterbury, Colchester, Coventry, Enfield, Luton, Manchester, Peterborough, Stockport and Wolverhampton.

It found that the area in which properties sold most slowly was Wolverhampton, but even here, the average sales time was just 138 days.

The area in which properties sold most quickly was Stockport, where sales took an average of just 104 days and this was closely followed by Coventry where the average sale took 124 days.

This is hardly surprising given that popular buy-to-let locations, by definition, are places where there is strong demand for property. What is, however, currently unclear, is whether these properties have been bought by residential buyers or by committed buy-to-let investors looking to expand their portfolios as, one way or another, this could have a significant impact on the housing market.

Mark Burns is the managing director of property investment company Hopwood House.

  •  G romit

    With 120,000 Landlords having exited the market already and more exiting still the number of properties available to rent is reducing rapidly. The consequences of thisare:
    1. less choice for Tenants,
    2. higher rents,
    3. more homelessness (Local Councils are struggling with volumes and costs as it is).

    Anyone with half a brain can see this coming except politicians

    icon

    To be fair Gromit you did say people with half a brain. You can't expect politicians to understand.

     
    icon

    Gromit, we all keep saying this but the politicians have taken a high dive and nothing will happen until they hit the rocks below.
    I had expected that long before homelessness became as bad as it is today, that the politicians would have reacted in a positive manner. More of the people this government represents will have to suffer before any action is taken.

     
  • Paul Barrett

    There is of course the massive black market in lettings caused by Accidental LL.
    Well due to CGT changes in 2020 it is pointless retaining such properties in the AST market.
    Such homeowners will be better off selling up or plausibly moving back into their homes taking in lodgers.
    There are about 300000 properties like this housing about 1 million tenants.
    Where are they all going to go!!??

  • icon

    Stupid Flash LAs who now rip off LLs because they cant rip off Tenants will force rents up. Do not pay any more than £200 to a LA to Tenant Find Only.
    If you are you are a fool.

  • icon

    I have used an independent letting agent in Norwich ( Spencer Ward ) for the past 15 yrs, they have always been fair to both landlord and tenant with their charges, but never the less their charges to me will have to increase, so new tenants will be paying an increased rent, however generally my tenants tend to stay longer, avoid the big national letting agents they are the rip off merchants.

    Paul Barrett

    Yep I believe small and local is beautiful!!!
    Rather use that sort of EA than a corporate.
    Interesting that it seems many LA are adding the tenant fees to management charges.
    Are many LL accepting this!?
    The problem I can see is where LL choose not to use LA puts them at a competitive advantage.
    I self-manage so could afford to be cheaper though in practice I chase market rents so as you intimate rents will be increasing.
    Silly old tenants will be paying far more than they would have in upfront charges but you know the one about the frog being brought to the boil.........never notices until too late!!!

     
  • icon

    Tenants didnt ask for this its all down to flash socks 4x4 LA not all major either small local try it on.
    Still say £200 is enough for tenant find only. Not intetested in management as do it myself and much quicker and efficient.

    Paul Barrett

    Yep I do believe the flash Harry's were too clever by half!
    So now tenants are clobbered with rent increases higher than they would have been.
    Tenants should have been given the option of paying up front or via a rent increase equal to the fees.
    For some reason I believe Govt believed that LL would not be able to increase rents to cover the fees that they now had to pay them!!!
    What a quaint idea.
    A bit like the quaint idea that Govt had that reducing HB would reduce rents charged by LL. Such quaint ideas have worked out well haven't they!!!!!!!!!!????????

     
  • icon

    Agree. Why these clueless twits dont educate themselves like us Professional LLs do as it woukd save so much grief.

    Paul Barrett

    Doesn't fit the political agenda though does it!?
    LL stand no chance whatsoever in the current political climate.
    Politicians consider they must be seen to be bashing LL who are allegedly the greedy enemy while of course supporting the always blameless snowflake tenants.
    What chance have good LL!?
    The only LL that can cope is the rogue one!!
    I am not prepared to become one to avoid all the stupid Govt legislation so I'm leaving!!!
    Tough s### on my soon to be 14 homeless tenants.
    Not my fault.
    No way am I selling BMV with them in situ.
    Full retail price with vacant possession.

     
icon

Please login to comment

Zero Deposit Zero Deposit Zero Deposit
sign up