As of May 2nd 2018, the Tenant Fees Bill will lead to the end of expensive letting fees and save tenants roughly 240m a year, according to the latest government figures.
Surprising letting fees and high deposits can cause a substantial affordability problem for tenants and are often not explained very well – which means that new tenants are unaware of the actual cost of renting a property.
The Tenant Fees Bill will also give tenants more confidence that the deposit they pay at the start of the tenancy cannot exceed 6 weeks’ rent.
Housing Secretary Rt Hon James Brokenshire MP said: “This government is determined to build a housing market fit for the future. Tenants across the country should not be stung by unexpected costs.
“That’s why we’re delivering our promise to ban letting fees, alongside other measures to make renting fairer and more transparent.”
The Tenant Fees Bill will be able to make sure that letting agencies are being stopped from abusing their position as “go-betweens” between landlords and tenants, which means that they will be able to prevent unfair practice, an example of this would be charging double for the same service.
It will also help to escalate competition between agents and landlords, which could help drive lower costs overall and a higher quality of service for tenants.
Additional key measures in the Tenant Fees Bill, which reflects feedback from a recent public consultation and pre-legislative scrutiny from the Housing, Communities and Local Government Select Committee, include:
Capping holding deposits at no more than one week’s rent. The Bill also sets out the proposed requirements on landlords and agents to return a holding deposit to a tenant;
Capping the amount that can be charged for a change to tenancy at £50 unless the landlord demonstrates that greater costs were incurred;
Creating a financial penalty with a fine of £5,000 for an initial breach of the ban with a criminal offence where a person has been fined or convicted of the same offence within the last 5 years. Financial penalties of up to £30,000 can be issued as an alternative to prosecution;
Requiring Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees via the First-tier Tribunal;
Prevents landlords from recovering possession of their property via the section 21 Housing Act 1988procedure until they have repaid any unlawfully charged fees;
Enabling the appointment of a lead enforcement authority in the lettings sector;
Amending the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla; and
Local authorities will be able to retain the money raised through financial penalties with this money reserved for future local housing enforcement.
Alongside rent and deposits, agents and landlords will only be permitted to charge tenants fees associated with:
A change or early termination of a tenancy when requested by the tenant
Utilities, communication services and Council Tax
Payments arising from a default by the tenant such as replacing a lost key.
The new measures are subject to Parliamentary timetables and will be introduced in law next year.
The Tenant Fees Bill adds onto the government’s work this year to protect tenants and landlords through the introduction of new rogue landlord database, outlawing orders for rogue landlords and property agents as well as a new code of practice to regulate the letting and managing agents sector.