Autumn Statement: £1.4bn affordable housing pledge and ban for letting agent fees

Philip Hammond
Philip Hammond

Chancellor Philip Hammond is to unveil a £1.4 billion investment in affordable housing and introduce measures to ban letting agents from charging upfront fees as he unveils the UK government’s Autumn Statement later today.

The boost for housing, in addition to a fund that is already worth £4.7bn, is expected to help build 40,000 new homes in England and would allow providers more flexibility to offer people lower rents.

Shelter Scotland called on the Scottish Government to use its share to build more affordable homes north of the Border.

Graeme Brown, director of Shelter Scotland, said: “This cash injection of £1.4bn in affordable housing by the UK government will mean Scotland should benefit by more than £100 million through Barnett Consequentials. We urge the Scottish Government to add this to the £3bn it has already committed to invest in affordable housing and build more than the 50,000 new homes it has promised and protect people from the impact of benefit cuts.”

The ban on letting fees, which would come into place after a consultation, brings England and Wales in line with measures already introduced in Scotland and follows campaigns by both the Labour party and a Lib Dem peer, Olly Grender.

They claimed that renters were being asked to pay hundreds of pounds for questionable reasons such as inventory checks.

Olly Grender said: “Our relentless campaigning to get tenants’ letting fees banned has finally paid off and the Government has recognised this is the right thing to do. The upfront costs of renting are far too high, pushing many people into debt just to pay the fees, and stopping others from being able to move into a rented home.

“It’s no coincidence that just five days after the debate on our Renters’ Rights Bill, which urged the Government to ban these fees, they have agreed to make this important change. Now they must agree to our calls to make renting safer and more secure too.”

Graeme Brown added: “News that upfront letting agent fees are to be outlawed in England and Wales is excellent news, giving private renters the same protection as tenants in Scotland already enjoy.”

David Cox, managing director, Association of Residential Letting Agents (ARLA) called the ban on letting agent fees “a draconian measure” which will have a “profoundly negative impact on the rental market”.

He said: “It will be the fourth assault on the sector in just over a year, and do little to help cash-poor renters save enough to get on the housing ladder. This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.

“Most letting agents do not profit from fees. Our research shows that the average fee charged by ARLA Licenced agents is £202 per tenant, which we think is fair, reasonable and far from exploitative for the service tenants receive.

“These costs enable agents to carry out various critical checks on tenants before letting a property. If fees are banned, these costs will be passed on to landlords, who will need to recoup the costs elsewhere, inevitably through higher rents. The banning of fees will end up hurting the most, the very people the government intends on helping the most.”

While admitting that some unscrupulous agents have got away with excessive fees, National Landlords Association chief executive, Richard Lambert, agreed that the cost would “boomerang” back on to private tenants.

Lambert said: “Agents will have no other option than to shift the fees on to landlords, which many will argue is more appropriate, since the landlord employs the agent. But adding to landlords’ costs, on top of restricting their ability to deduct their business costs from their taxable income, will only push more towards increasing rents.”

The Residential Landlords Association (RLA) have highlighted a tweet from the current housing minister which also agreed that the letting agent fee ban will drive up rents.

Gavin Barwell MP said in September in a tweet responding to a call for a ban: “Bad idea – landlords would pass costs on to tenants via rent. We’re looking at other ways to cut upfront costs & raise standards.”

Just last week, communities and local government minister, Lord Bourne, also expressed reservations about such a policy warning that “we must be mindful of the potential impact on rents from banning fees paid by tenants.”

RLA chairman Alan Ward, said: “This will not help tenants, especially those who are ‘just managing’. Agents’ fees have to be paid by somebody. If any extra fees are passed on to landlords, tenants will end up paying them forever as market rents will increase.

“It would have been much better for the Government to have taken steps to improve the transparency of fees charged by agents by forcing them to publicise what the fees actually cover.”

Other measures to be set out today include an investment of over £1bn into Universal Credit over five years by reducing the rate at which benefits are taken off people as they progress through work and increasing the national living wage from £7.20 to £7.50 an hour from April 2017.

Shelter Scotland’s Graeme Brown added: “A reduction in the Universal Credit taper is welcome news but this statement is a missed opportunity to rethink the ill-conceived benefits cap cut that will only push more struggling families in Scotland closer to homelessness.”

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