James Davis' Comments on the Autumn Statement
James Davis, CEO and founder of Upad, comments on the Autumn Statement 2016.
Ban on lettings agent fees
“It shouldn’t be a surprise that the Chancellor has announced that it is banning letting agent’s fees, but I think the industry is still shocked. Ultimately, market forces haven’t prevailed in all of this. Foxtons put their tenant’s fees up by £50 every couple of years and it is purely to increase their profits, whilst other high street lettings agents ludicrously charge over £300 simply to press print on an identical tenancy agreement to renew for the following year. Long suffering tenants (as the Government has coined JAMs “Just About Managing”) have no choice but to pay it as renting is a necessity; it is not like if a shop put up its prices and the amount it sold would go down.
Robbing Peter to pay Paul
“The Government has needed to have a role to play in this important issue for some time. However, ultimately it is case of robbing Peter to pay Paul, as this cost will get passed onto landlords and consequently tenants through rent rises. Rents in Edinburgh went up 8% in the year after tenant fees were abolished (way over the growth of UK rents that year) and the same will now happen in England. This will only make matters worse for tenants who in some cases are already paying up to two thirds of their salary on rent. Unfortunately, the people making these decisions, don’t seem to understand the dynamics of the lettings market and the effect that this will have – both Theresa May and Philip Hammond have themselves previously voted against a ban on fees!
2017 – year of rent arrears
“Already there is a total mismatch between supply and demand, which is driving rents up by as much as 5% a year, rising far higher than salaries, which are predicted to rise by only 1% next year. As a result, 10% of all tenants in the UK have fallen behind with their rent payments (as of August 2016) and I predict that 2017 will see the highest yet, not only with today’s news but other landlord taxes set to increase in April 2017. Alarmingly, in the last two months, more properties have been sold than purchased by landlords and if this trend continues, then tenants really will be in trouble.”