In his first Autumn Statement, Chancellor Philip Hammond announced a ban on letting agents charging fees to tenants and the launch of a £2.3bn housing infrastructure fund.
In a move to address affordability issues in the private rented sector, lettings agents are to be banned from charging fees to renters, for example, when they sign a new tenancy agreement. This will stop tenants being hit with fees averaging £233 per tenancy.
Discussing the policy announcement in the Autumn Statement, Hammond said:
“In the private rental market, letting agents are currently able to charge unregulated fees to tenants. We have seen these fees spiral, often to hundreds of pounds. This is wrong. Landlords appoint letting agents and landlords should meet their fees. So I can announce today that we will ban fees to tenants as soon as possible.”
The government will consult on this in due course.
Letting fees have already been banned in Scotland.
Commenting on the ban, David Whittaker, CEO at Mortgages for Business said:
“Whilst Mr Hammond hopes that letting agents will be able to absorb the costs involved in banning fees to tenants, I have no doubt the costs will be passed on directly to landlords who may, in turn, pass them down to tenants in the long run.”
Delivering his Autumn Statement, Chancellor Philip Hammond also said that home ownership was still impossible for many. Ahead of a Housing White Paper which is due to be released shortly, he announced that the government is launching a £2.3bn Housing Infrastructure Fund to deliver the infrastructure for up to 100,000 new homes in areas of high demand. He also announced a fund of £3.15bn for 90,000 new houses in London.
To deliver a mix of homes for affordable rent and low cost ownership, the government has also set aside £1.4bn to provide housing that meets the ‘needs of people in different circumstances and at different stages of their lives’.
The funds will be shared between rent to buy, shared ownership and affordable rent schemes, which all fall under the 2016-2021 Affordable Homes Programme.
Documents published as part of the Autumn Statement reveal that the government has upped its profit forecasts for the Stamp Duty Land Tax surcharge which came into effect on 1 April this year, by 81% to £7bn.
The 3% surcharge on buy to let and second homes was originally expected to raise £3.8bn from 2016/17 to 2020/2021, but the Treasury has so far collected more than forecast and so has increased its expected surcharge tax take by 81% to 6.9bn.
The Treasury said that “low quality data and the potential for a large behavioural effect” made it difficult to predict the impact of the SDLT surcharge and it admits that updated total bill predictions are still uncertain because tax payers are entitled to a refund within three years of selling their main residence, therefore potentially altering the figures again.
Insurance premium tax
Landlords could also see a rise in their insurance premiums as Mr Hammond also announced that IPT, which is a tax on insurers, is being increased from 10% to 12%, although it will be up to the insurance companies themselves to decide whether and how to pass the cost on to customers.
Right to Buy
The Autumn Statement also brought news that the Government will fund a “large-scale” regional pilot of the Right to Buy scheme for housing association tenants, but it is to halve the expected bill for the Help to Buy ISA due to low take up.
Meanwhile, the forecast for UK GDP growth has been slashed to 1.4% in 2017 compared to 2.2% predicted in the March budget.
The Office for National Statistics (ONS) said that potential growth will be 2.4% lower than had we not been leaving the EU.
The forecast for 2018 has been cut to 1.7% and to 2.1% in 2019 and 2020. The forecast for 2021 is currently 2%.
Previously, each of the three years had been predicted to see GDP growth of 2.1%.
However, the forecast for 2016 is higher than the 2% predicted in March, at 2.1%, and the economy has so far fared better than expected in the immediate aftermath of the Brexit vote.
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24th November 2016