Plans banning letting fees are being presented to Parliament.
The Tenant Fees Bill, which was first announced in the Queen’s Speech this summer, is being introduced as the Government says the fees are often not clearly or consistently explained, leaving many tenants unaware of the true costs of renting a property.
If the bill becomes law in its current form, renters will only be charged: rent, a refundable tenancy deposit, a holding deposit and a tenant default fee, such as for late payment or breach of the tenancy agreement.It will be subject to consultation and scrutiny by MPs and so may not be passed or could take months to be agreed. So it is not law as yet.
How will this affect you if you are a property owner who has buy-to-let properties?
The law is to being changed it appears to protect renters and to make it easier for tenants to be able to afford to begin renting a property in the first place and to protect them regarding deposits. The other charges such as administration costs will possibly become illegal and therefore the cost of renting a property will be reduced for the tenant.
Changes in interest rate tax allowances last year meant that property owners who rented out properties could no longer claim benefits of tax relief on mortgages on buy-to-let properties. This has increased costs on buy-to-let properties for many or induced them to sell the properties. Proposed changes in the law now being discussed may have a further affect on those letting out properties. For tenants it may induce longer-term lettings contracts to become the norm thus cutting administration costs to the landlord and letting agents. Adversely; the buy-to-let market may become less attractive and so reduce the number of properties available to rent – this is a possibility. If buy-to-let landlords decide that renting out is too costly, they may want to sell their properties which will release more properties onto the property market for sale. There is a possibility of that happening, but with interest rates on savings so low, property is likely to remain a very popular form of investment for the future.