Shares in nearly all of the big UK estate agents slipped on Tuesday, as investors became nervous as to what the Chancellor might have in store for the sector in his upcoming Autumn Statement.
Many sources are predicting that Philip Hammond will ban estate agents from charging letting fees to tenants, which will likely hit their profitability.
M Winkworth PLC (LON:WINK) was the best performer but even that was down by 1%, while Purplebricks Group PLC (LON:PURP) and Countrywide PLC (LON:CWD) both fell by 6%.
Foxtons Group PLC (LON:FOXT) was the hardest hit, with the stock losing more than 10% in morning deals.
At the moment, those renting can be charged a host of different fees, from immigration and credit checks, through to general admin fees.
Hammond is expected to ban this practice and instead make landlords foot the bill.
By doing that, the government hopes to spur some healthy competition and lower the cost of the fees, as landlords can shop around for the best agent through which to let their property, an option that tenants don’t have.
“News of a ban on charging fees to tenants comes as a hammer blow to embattled estate agents,” ETX Capital’s Neil Wilson is quoted as saying by The Guardian.
“Passing on the cost to landlords could drive down fees by improving competition, although estate agents claim they make no money from fees,” Wilson added.