The UK's Autumn Statement
Last week saw the first Autumn Statement with new Chancellor of the Exchequer Philip Hammond at the helm, and as usual there was one main talking point: This year’s was the Chancellor’s decision to regulate fees charged to tenants renting privately in the UK.
Perhaps taking the lead from Scotland (a country which has banned all lettings fees), Mr. Hammond has condemned the actions of lettings agents across the country, who shift the cost of basic administration like signing contracts and creating an inventory over to unsuspecting tenants, who often have to foot a bill often in the region of hundreds of pounds. The Chancellor’s justification for this premeditated action was that lettings agents should be funding these admin costs through the fee paid by the landlord for the lettings agent’s service rather than from the pockets of tenants, who are already stretched financially from rising rents.
Whilst nobody is sure when and indeed how Mr. Hammond intends to introduce these measures, one thing is for sure—there has been widespread industry backlash as a result. The majority of speculators comment that these actions were declared in an attempt to help renters, but the fact is that the actions of the Government will do nothing but force rents even higher. Lettings agents, who will not be able to recoup the costs of admin from their tenants, will inevitably charge landlords more for their services, which will lead landlords to increase rent—thus tenants will end up footing the bill, either directly or indirectly.
As a result, industry experts have condemned the action, knowing that it will just cause rents to escalate further. Average rents are already topping out in the UK at an average rate of £902 per month according to HomeTrack (rising significantly to £1,542 per month in London), which is only going to continue with a vengeance once the monumental fee changes come into place. And renters’ problems don’t end there: Savills have predicted that tenants’ rents across the UK will rise 19% in the next 5 years, while Londoners will see their rents grow 25%—if these figures are correct, UK renters could be facing monthly rent of £1,073 (and Londoners £1,927) as early as 2020.
All in all it was an eventful inauguration for Chancellor Philip Hammond, but one thing is for certain—with or without these new changes, the UK's rental revolution is still in full swing, and shows no signs of slowing down.