Autumn Statement  

Letting agency fee ban could push up protection sales

Letting agency fee ban could push up protection sales

Estate and letting agents could sell more protection policies when the ban on their fees is introduced, LifeQuote’s sales and marketing director said.

In last month’s Autumn Statement, Chancellor Philip Hammond banned letting agents from charging fees to tenants.

Neil McCarthy said they could now turn to protection to make up for the financial shortfall this could create.

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He said: “There is a popular misconception that renters don’t need protection.

“This may be true for some people and indeed bizarrely could be detrimental, as it could impact on means testing and Universal Credit.

“But, there are many more for whom protection is essential as their rental payments are broadly equivalent to a mortgage payment and, similarly, the loss of income equally devastating.

“As a result this ban may have positive consequences for the protection market.”

With the average letting fee is reported to be around £200, Mr McCarthy said the commission received from selling protection policies could more than cover this financial loss.

Typical commission on an income protection policy can easily range from £250 to £1,000.

There have been predictions that landlords will increase rents in a bid to pass on the fees letting agencies charge them.

Mr Hammond also said he would spend £2.3bn on infrastructure to allow 100,000 homes to be built in areas of high demand.

But he also increased insurance premium tax, which is due to hit 12 per cent from June 2017.