Leading law firm Wilsons has said rural landlords could suffer if letting agents are banned from charging tenants fees for administration costs.
The Chancellor announced there would be a consultation on the possible ban in his recent Autumn Statement.
Wilsons said the change would mean landlords, rather than tenants, would foot the bill for administration fees charged by letting agents.
Belinda Watson, partner at the firm, said: “The recent tax changes are clearly aimed at tempering the buy-to-let market – but in the meantime, they will also cause serious collateral damage to rural landlords who in many cases depend heavily on rental income to supplement their income from agriculture.
“These increased costs may be relatively easy to pass on to tenants in urban areas, but this may not necessarily be the case in rural areas.”
String of changes
The law firm said the proposed ban follows a string of changes by former Chancellor George Osborne which would see rural landlords face increasingly large tax bills.
Following the removal of the annual ‘wear and tear’ allowance, landlords are expected to absorb the cost of repairs to rental properties upfront and claim retrospective deductions against their rental income.
From 1 April 2017, they will also be unable to offset the full cost of borrowing against rental income due to tapering restrictions on their finance costs.
CLA housing adviser Matthew O’Connell said: “We understand the Government’s intentions with this measure, targeting the bad practice taking place in urban areas.
“Around 40 per cent of CLA landlord members use letting agents to find their tenants, so our aim in the weeks ahead will be to ensure the rules do not have any negative unforeseen consequences for rural landlords.
“We will be responding to the consultation on the proposals in due course.”