Last month the government announced plans to scrap letting agent fees in England. But what impact will this have and how will the change hit the property market as a result?
The ban on letting agent fees could create a hike in monthly rental fees for tenants as agents looks to secure expenses from landlords instead.
In addition, with the rise in stamp duty and offset taxation changes set to hit landlords, this could be just another reason for investors to look for commercial investment opportunities.
According to the Citizens’ Advice Bureau (CAB), 42% of the renting population had to borrow money in order to pay their letting agent fees, with other research from CAB showing almost two-thirds (64%) proving difficulty to pay these fees.
Sam Spencer, associate at Bruton Knowles said: “The ban on letting agent fees will no doubt make buy-to-let investment less attractive, as letting fees being scrapped will allow renters the flexibility to move more frequently and see large savings in their overall costs to move. As a result this may boost investment in commercial property across the country as residential landlords will now incur more costs than they used to.
“In recent months, Nottingham has seen a huge spike in commercial property investment, particularly throughout the hospitality and independent scene across the city. More investors are turning to individual bars, restaurants and shops as opposed to residential properties.
“Commercial leases are generally for longer terms than residential lets, making them a potentially more secure and stable income source for the landlord. However there are other costs associated with holding commercial property, including management charges and professional fees for negotiating matters such as rent reviews.”
There are a significant number of factors which are affecting the housing market currently, and finding ways of better utilising existing buildings that are already available will be one solution. Reducing the number of vacant properties to help increase housing stock will help to relieve the pressure to build new properties.