With the recent Autumn Statement delivered by Chancellor of the Exchequer Philip Hammond outlining plans to ban letting agent fees, some concerns have been raised that the UK’s private sector landlords could be faced with extra costs as a result.
However, there is unlikely to be any great impact on landlord finances as a result of the change, according to one analysis by a property classifieds site, which estimated that even if letting agents passed on the costs to landlords, rent guarantee scheme policyholders would experience a mere 0.14% drop in returns.
A softer impact on landlords than widely feared
The site stated that the average fees charged to UK tenants were currently around £300, with some London renters being forced to pay as much as £700. However, it was calculated that even if landlords took the financial hit of such changes, they would only miss out on about £25 a month on average.
Much of what landlords already pay is in the management services that letting agents provide, typically charged at between 10% and 15% of their rental income. The total fees for a year at the average UK rent of £902 a month, as of October 2016, would be about £95 a month, or £1,140 a year. If the cost of the banned lettings fees of about £300 is considered, the new total would be £1,440, which equates to an increase of £25 a month.
While such an additional charge may seem unfair to landlords, the increase in monthly fees is unlikely to greatly affect their finances. However, the slightly increased financial pressure may lead more landlords to contemplate managing their properties independently.
Comprehensive rent insurance from Advanced Rent
Although costs may go up slightly for landlords when the ban comes into force, it is unlikely to bring many of them to their knees.
What will probably be more important for many landlords to consider is reliable insurance for their rent. Advanced Rent offers an affordable rent guarantee scheme that will ensure that you always receive your rent on time each due date, even if your tenant doesn’t pay.
To learn more about our landlord services and receive a quick quote, feel free to get in touch with the friendly and professional Advanced Rent team today.