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.
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.