News that Chancellor Philip Hammond is due to announce plans to ban fees charged by estate agents in his Autumn statement has seen shares in the sector slump.
The change in policy, due to be announced later on Wednesday by Mr Hammond, 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 were still downed by 10 per cent at 10am.
Countrywide, the UK’s largest estate agent, was also hit, dropping by 7 per cent in early trading. Meanwhile Savills, slipped by 1 per cent.
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 James or the "just about managing".
In the Commons on Wednesday, Mr Hammond will seek to build on that promise, unveiling measures "designed to improve the living standards of ordinary working-class people and their families".
The ban on letting fees, which would come into place after a consultation, follows campaigns by both the Labour party and a Lib Dem peer, Olly Grender.
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 banning them was welcome:
He said: "Millions of renters in England have felt the financial strain of unfair letting agent fees for far too long”.
