Landlords are preparing to absorb the cost of the proposed new ban on letting agent fees, a new study has revealed.
According to the research, 70 per cent of landlords believe that letting agents will increase their fees to landlords as a result of the proposed ban to stop charging tenants.
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Landlords won’t move letting agent despite cost changes
The Chancellor announced the new policy last autumn - a move that was welcomed by housing campaigners who argued that the fees were unfair to tenants and that landlords should pay the costs instead.
At the time of the announcement, it was also argued that landlords would remain unaffected as they could simply use a cheaper letting agent.
However, the latest findings by the UK Association of Letting Agents (UKALA) claims that 71 per cent of landlords will continue to use their letting agent even if their premiums rise.
Will landlords raise rents?
Although one of the main reasons for the change was to reduce the burden on tenants, that part of the plan may have backfired.
While there was no significant increase in rental prices when a similar change was introduced there, 40 per cent of English landlords said they would increase rents to cover the additional costs.
Only nine per cent said they would leave their letting agent, while 13 per cent said that they would attempt to negotiate or refuse to pay.
Good news for letting agents, but what about landlords?
Richard Price, executive director of UKALA, said: “The ban on tenant fees could leave hundreds of professional businesses with no other option than to increase fees for their landlord clients.
He went on to say that the research is reassuring for letting agents, adding the fact landlords are willing to pay more is “testament to the essential role that agents play.”
But while some landlords plan to raise rents or negotiate, some may find themselves having to absorb the cost.
This is the latest blow to property investors following the introduction of the three per cent stamp duty surcharge on second homes and buy-to-let properties, and the reduction of tax relief that they can claim - something that is being phased in over four years from next month.
Are you willing to keep your letting agent if they increase their fees? Let us know in the comments.