Fees Ban:

Given the Brexit shenanigans in the House of Commons, the Tenant Fees Bill is likely to get a smoother passage through Parliament, with fewer amendments than would otherwise have been the case.

The controversial Bill if passed, which looks highly likely, will from early next year ban most pre-tenancy charges by landlords and letting agents to tenants in England.

- Advertisement -

The Tenant Fees Bill was introduced into Parliament in Mayof this year, and it has since completed its stages in the House of Commons and moved swiftly into the Lords for further scrutiny.

It’s now over two years since the Chancellor, PhilipHammond, announced there would be a ban on letting agent fees for tenants inhis 2016 Autumn Statement. The announcement came after Lib Dem peer Baroness Olly Grender’s private member’s Bill.

With average agent’s fees coming in at over £200, and with some recorded at over £700, it’s not surprising that the industry came in for a lot of criticism from tenant supporting bodies, and many industry experts feel that, with the help of some “greedy” high profile agents, it rather shot itself in the foot!

The proposed legislation has two key changes to the way private renting works in England – these fees have been illegal in Scotland for sometime. They are first of all a ban on all of the upfront fees letting agents and landlords can currently charge, pre and post-letting.

These are normally listed as such items as administration fees, credit and reference check fees, inventory fees, plus mid-tenancy tenancy renewal fees. Under the proposed legislation, the only fees tenants can be charged will be for the rent, a refundable security deposit, a refundable holding deposit and what are known as ‘default fees’.  The latter being reasonable charges legally levied when the tenant defaults on the contract.

The Bill also introduces, for the first time, a cap on the amount of security deposit that can be taken, likely to be 5 week’s rent equivalent, and for a holding deposit, one week’s rent.

Local authorities will be given the responsibility of enforcing the regulations on both landlords and letting agents, with a £5,000 penalty for a first offence and there are more severe penalties such as a criminal prosecution, for subsequent offences.

Baroness Grender, writing for PoliticsHome says:

“The sooner the Tenant Fees Bill becomes law, the sooner renters get a fairer deal.

“When I first proposed this change in 2016 through a Private Member’s Bill, it was a flat “no” from the Conservative Government.  However, they could not keep ignoring the overwhelming evidence that people on low incomes or benefits who were renting privately were being ripped off with shocking admin fees.

“The worst part is that families who are evicted or cannot afford a rent rise are pushed into homelessness by the astronomical up-front admin fees.  The option to move is not feasible, as even when they try to move to a cheaper home, agents were charging both landlord and tenant these up-front fees.

“With homelessness continuing to rise, and the leading cause being the end of a private rented sector tenancy, it is clear reform is needed– and fast. This is why this Bill is so vitally important. The double dip with both landlord and tenant being charged these extortionate fees will soon be a thing of the past and this change in the law cannot come soon enough,” she adds.

Following the Bill’s passage in the Commons, David Cox, Chief Executive of ARLA Propertymark has said:

“We’re disappointed but unsurprised the Tenant Fees Bill has passed the House of Commons. Over the summer, we worked with Daniel Kawczynski MP on his amendment to allow agents to charge up to £300. Although the amendment was unsuccessful, this shows that members involved in ARLA Propertymark’s campaign have helped MPs understand the unintended consequences of the tenant fee ban; with some MPs listening to the legitimate concerns of the industry. As the Bill moves into the House of Lords we will continue working to ensure Parliamentarians understand the impact the ban will have on the whole private rented sector.”

Here are some of the amendments to the Bill recorded so far: 

  • The default payments will not be a permitted payment if the nature of the charge is not recorded in the tenancy agreement.
  • To charge a default fee, the landlord or agent must provide proof of reasonable costs incurred, such as a receipt for having a new key cut.
  • A tenant’s consent will be required to dictate whether their holding deposit or a prohibited payment will be repaid through deduction of rent or on the return of the tenancy deposit.
  • Landlords and agents will be required to payback a prohibited payment within a period of 7-14 days, where previously theyhad 28 days.
  • Relocation agents will be allowed to charge a tenant where they have only sourced the property for them and are not workingon behalf of the landlord.

The Tenant Fees Ban – Parliament

3 COMMENTS

  1. it seems very much that all the legislation protects tenants, and landlords get a really bad deal from rogue tenants. I have lost thousands of pounds due to rogue tenants, and although I followed the rules to the letter, I still lost out. How can that be? I’m not a multi-millionaire property developer and I can’t afford to lose money like that. What comeback do small private landlords have?

  2. So this is what will happen when this stupid bill is introduced.
    For any tenant wishingg to be considered for a tenancy they will have to provide the LL with a Tenant Referencing Passport; LRS being one of the bezt and currently costing £40.
    If a prospective tenant doesn’t wish to purchase their TRP that is their prerogative and of course in that case the LL won’t consider them.
    No LL would be stupid enough to state that a tenant needs to pay for their own referencing.
    But of coyrse the LL is perfectly entitled to state without referencing the tenant won’t be considered.
    Most tenants will acxept they will have to buy their own TRP ad the LL certainly won’t.
    This is actually very very good news for tenants as a TRP is valid for 3 months.
    Prospective tenants can tout their TRP round to any number of LA and LL.
    So just one cost of about £40.
    No LL is going to be so stupid to pay for every tenants referencing nor will they be so stupid as to pay the LA increased fees.
    The TRP is the perfect solution.
    All other referencing is useless as LL would need to pay for it and they won’t.
    Having a TRP will nean tenants are ready equiped to take on a tenancy imnediately as the referencing will have been done and the vest tenant prospects will qualify for RGI.
    LL will go for the cream tenant prospects who qualify for RGI.
    This means no HB tenants will ever qualify and so increasingly HB tenants will struggle to find a LL prepared to offer them a tenancy and all vecause of the dysfunctional eviction process and benefit cuts.
    As for holding deposits.
    This what will happen.
    Very few LL are stupid enough to take more than 2 months rent as a deposit for reasons that are well known.
    All that will happen now is that 1st months rent will include 3 weeks deposit.
    So the 1st month will be 5 weeks deposit; 1 months rent in advance plus 3 weeks depisit included in the 1st months advance rent but it will not be stated as such.
    The 2nd month the rent will reduce to the normal monthly rent.
    Nobody can prevent a LL reducing the rent for the 2nd and subsequent months.
    If the AST ends then the 5 weeks deposit may be refunded and as a goodwill gesture the LL may well choose to refund the additional 3 weeks rent taken at the first month.
    All this means is that 3 weeks of the deposit will be unprotected.
    These MPs are idiots.
    They must believe LL are simpletons!!

    So there you have it.
    Tenants will still be paying 2 months rent as deposit and they wi still be paying for referencing albeit very cheap referencing which they can use anywhere for 3 months.

  3. The Government fail to understand the costs landlords and agents incur in carrying out the referencing process for new tenants. Also the administration time and costs involved. Are we to work for nothing?? In what other industry would people carry out work, incur costs, all for nothing. As a private landlord for over 15 years, i am finding the government squeeze is now becoming too difficult to sustain and may need to consider my options.

LEAVE A REPLY

Please enter your comment!
Please enter your name here