Foxtons share prices plummet 13% in one hour as Government scraps letting fees

The change in policy is designed to help 'ordinary working class people' avoid additional costs when renting

Chancellor Philip Hammond's decision to ban fees charged by estate agents in his Autumn Statement has seen shares in the sector slump.

The change in policy is designed to help “ordinary working class people” avoid additional costs when renting.

Foxtons shares plunged by more than 13 per cent in just an hour in early trading, after a briefing document on Monday indicated the fees will be banned. Shares dropped even furrther following Mr Hammond's speech, down more than 14 per cent by market closing time on Wednesday.

Countrywide, the UK’s largest estate agent, was also hit hard with shares dropping by 7 per cent in early trading, while Savills slipped by 1 per cent. Both have recovered slightly but were stil down 5 per cent and 0.95 per cent respectively.

Neil Wilson, market analyst at ETX Capital, said the ban on charging fees to tenants comes as a “hammer blow” to embattled estate agents.

He said: "Passing on the cost to landlords could drive down fees by improving competition, although estate agents claim they make no money from fees. Estate agents have suffered since the Brexit vote – shares in Foxtons are still trading down around 30 per cent from their pre-referendum level amid falling client activity. Countrywide stock is now worth a third of what it was in May 2015."

Theresa May promised in her opening speech as Prime Minister to lead a Government for the Jams or those who were "just about managing".

The move was welcomed by housing charities which said the change would signal a "huge difference" to renters. Charities have said that these primarily upfront fees have risen in recent years.

Fees typically cost £223, according to the latest English Housing Survey. However, Shelter research in 2012 found that one in seven tenants pays more than £500.

Campbell Robb, Shelter's chief executive, said: "Millions of renters in England have felt the financial strain of unfair letting agent fees for far too long. We’ve long been campaigning on this issue and it’s great to see that the Government has taken note."

"Our recent survey found that nearly half of renters had been asked to pay fees that they thought were too high, with many having to borrow money every time they move, so this will make a huge difference to all those scraping by in our expensive, unstable renting market."