2 The evidence on the impact of the
ban on letting agents' fees in Scotland
Overview
of the submissions
10. This chapter examines the methodologies used
to the produce the evidence we received and summarises the key
findings put forward by the respondents which we consider pertinent
to addressing the question about what impact, if any, the Scottish
Government's decision to ban agents' fees has had on the overall
costs and operation of the housing market in Scotland.[16]
Our assessment of the evidence is provided in chapter 3.
11. The four submissions differ in the methods they
use to answer the question about the impact of the decision to
ban agents' fees, on what types and sources of data they use and
on the timeframe they use to base their analysis.
| Submission
| Methods used
| Time period analysis undertaken in the submission
|
| Shelter Scotland | BDRC
| Telephone survey of letting agents
Mystery shopper exercise of letting agents
Survey of landlords
Follow-up interviews with landlords
Interviews with 'experts'
Survey of tenants
| Dec 2013-Feb 14
Nov-Dec 13
Dec 13
Jan 14
Jan 14
Dec 13-Jan 14
|
| Rettie
| Statistical regression analysis of data on economic performance (from the Scottish Government); employment and unemployment (from Office for National Statistics' Labour Force Survey); pay for full-time workers (from Office for National Statistics' Annual Survey of Hours and Earnings (ASHE)); number of households (from National Records Scotland); the proportion of dwellings in private rented sector (from Scottish Household Survey); the number of mortgage loans (from Council of Mortgage Lenders); house prices (from Registers of Scotland)
Analysis of Office for National Statistics' Index of Private Housing Rental Prices (IPHRP)
Analysis of rents data from Citylets; HomeLet Rental Index; MoveWithUs Rental Index
Analysis of Companies House data
| 1963-Dec 13
Jan 11-Dec 13
Jan 04-Dec 13
Oct 12 and Jan 13
|
| Scottish Association of Landlords and the Council of Letting Agents
| Survey of members
Analysis of rents data from Citylets
| Aug 14
Apr 10-Apr 14
|
| National Landlords Association (NLA)
| Analysis of rents data from 'Your Move'
Analysis of rents data from HomeLet Rental Index
Benchmarking exercise of letting agents in one area in Scotland
Feedback from NLA members
| Jul 13 and Jul 14 |
| Generation Rent |
Analysis of rents data from Lettingweb
Analysis of Shelter's research
| Jul 10-Jul 14
|
SHELTER SCOTLAND
12. The submission by Shelter Scotland was based upon two reports
which it commissioned from external organisations.[17]
The first, "The impact of legislation on letting agents fees
in Scotland: quantitative analysis", was produced by Rettie
and Co., an independent firm of property specialists based in
Scotland.[18] The second
report, "The impact of clarification on letting agent fees
in Scotland", was produced by BDRC Continental, an independent
research consultancy.[19]
On the basis of the research in the reports, Shelter Scotland
stated that there was "no conclusive evidence" that
the ban on fees in Scotland led to an increase in rents. It said
that the "independent analysis found that other market pressures
were far more likely to have contributed to rising rents in the
private rented sector".[20]
Shelter summarised the findings in a blog:
· landlords
in Scotland were no more likely to have increased rents since
2012 than landlords elsewhere in the UK;
· fewer than
one in five of the letting agency managers interviewed as part
of the research said they had increased their fees to landlords;
and
· many landlords
opted to absorb any increase in their letting agency fees as opposed
to passing it on in full.[21]
Shelter added what we have taken to be a qualification
that
while this research was extremely rigorous, it
still did not reveal all the answers. One part of the research
showed an unexpected 1-2% rise in Scottish rents, although it
could not conclude to what extent the ban had, or had not, contributed
to this rise. Other sections of the research suggested wider economic
factors were clearly a larger contributing factor. Ultimately,
it is extremely difficult to disentangle what factors drive changes
in rent levels'.[22]
SCOTTISH ASSOCIATION OF LANDLORDS
AND THE COUNCIL OF LETTING AGENTS
13. In their joint response the Scottish Association
of Landlords and its letting agent division, the Council of Letting
Agents (CLA), reported findings from a survey they had conducted
of 103 CLA members in Scotland and an analysis of average monthly
rents taken from data provided by Citylets.[23]
The majority of respondents to CLA's survey appear to have seen
no impact in terms of increased rents, the charging of fees to
landlords or the introduction of new charges to tenants. However,
a considerable minority of members reported impact on the following
areas:
· 20%
reported an increase in rent as a result of the change;
· 9% reported
the introduction of other fees for tenants;
· 34% of respondents
had started charging fees to landlords that tenants previously
paid; and
· 23% had increased
management fees charged to landlords.
14. Data on average monthly rents from Citylets were
reported to show an increase in average monthly rents in Scotland
by £18 (to £672) between the second quarter of 2010
and the second quarter of 2012, with a further increase of £51
from the second quarter of 2012 to the same period in 2014. In
its submission, the Scottish Association of Landlords noted that,
while "this increase cannot purely be attributed to tenant
fees legislation as there are a number of other factors influencing
market rent [...] it is realistic to suggest that at least in
part the increase has been due to the legislation".[24]
THE NATIONAL LANDLORDS ASSOCIATION
15. The submission by the National Landlords Association
cited two main sources. The first was data on average rents from
"Your Move" and the second was data from the HomeLet
Rental Index, which is gathered from HomeLet's tenant referencing
service.[25] The National
Landlords Association said data from Your Move showed that that
average rents in Scotland had increased by 2.3%, with the fastest
annual increase in the South of Scotland, where the average monthly
rent in July 2014 was 4.8% higher than in July 2013. It believed
that this increase was "due to" the Scottish Government's
decision to introduce a ban on fees and "the letting fee
still exists but has been transferred into the rent; tenants are
now paying a higher rent".[26]
GENERATION RENT
16. The submission by Generation Rent cited data
from a number of different sources including the research undertaken
by Shelter, rents data from Lettingweb and findings from other
surveys that were not specified.[27]
Citing data from Lettingweb, the submission outlined a rise in
the cost of private renting of an average of 6.9% between 2010
and 2014. However, it supported the view attributed to Lettingweb
that this rise was due to increased population and a lack of supply
in the private rented sector and concluded that "the change
[by the Scottish Government] has had no effect at all on rent
levels". Although stating that Shelter's report was the most
comprehensive undertaken, Generation Rent said that "there
has been no research that shows a causal link either way between
ending lettings agents' fees for tenants and a rise in rents".[28]
Concluding assessments
17. The four submissions were divided in their assessments
about the impact of the decision to ban fees in Scotland and some
of the evidence came with caveats.
16 Back
17
See letter from Shelter Scotland to the Chair, 29 October 2014,
in . Back
18
Rettie and Co., The impact of legislation on letting agents fees in Scotland: Quantitative analysis,
March 2014 Back
19
BDRC, The impact of clarification on letting agent fees in Scotland: Research report prepared for SHELTER,
March 2014 Back
20
Back
21
"What's really happened to rents in Scotland?" Shelter
policy blog, accessed March 2015 Back
22
"What's really happened to rents in Scotland?" Shelter
policy blog, accessed March 2015 Back
23
Letter from the Scottish Association of Landlords to the Chair,
8 October 2014, in Back
24
Letter from the Scottish Association of Landlords to the Chair
in Back
25
Email from the National Landlords Association to the Committee,
27 October 2014, in Back
26
Email from Generation Rent to the Committee, 30 October 2014,
in Back
27
As above Back
28
As above Back
| 
