Yesterday, the Government published its tenant fees bill, which will ban all letting and agents fees charged to tenants by agents and landlords in England.
The Government first announced in that they would ban letting agents’ fees in the Autumn Statement 2016. From April to June 2017 the Government held a consultation on introducing a ban on letting agent fees paid by tenants which received over 4,700 responses.
The Government had initially proposed in the consultation to cap security deposits at no more than 4 weeks’ rent. From the beginning of the process, the NLA has been actively campaigning around raising the cap to 6 weeks. This was outlined when Richard Lambert, CEO of the NLA, met with the Minister of State for Housing and Planning Alok Sharma MP in September and pressed him to rethink the level of this cap.
The NLA argued that imposing an arbitrary cap on security deposits of one month’s rent would have unintended consequences, which could be damaging to certain groups of prospective tenants. It could also have the counter-productive effect of reducing some households’ abilities to secure suitable accommodation in the sector.
The main measures contained in the Tenant Fees Bill will:
- Ban letting agents or landlords from charging fees for the granting, renewal or continuation of a tenancy.
- Cap holding deposits at no more than one week’s rent and security deposits at no more than 6 weeks’ rent. It is important to note that this six weeks will be ‘an upper limit and not a guideline’, with each landlord deciding this on a case by case basis.
- The draft bill also sets out the proposed requirements on landlords and agents to return a holding deposit to a tenant.
- Create a civil offence with a fine of £5,000 for an initial breach of the ban on letting agent fees and creating a criminal offence where a person has been fined or convicted of the same offence within the last 5 years. Civil penalties of up to £30,000 can be issued as an alternative to prosecution.
- Require Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees.
- Appoint a lead enforcement authority in the lettings sector.
- Amend the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla.
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 lost key.
- The new measures are subject to Parliamentary timetables and will be introduced in law next year.
Speaking on the bill, Ministry of Housing, Communities and Local Government spokesperson Becky Perks said:
“We have accepted the majority of their recommendations, which have refined and informed the final Bill. After careful consideration, the Government has decided not to accept the Committee’s recommendation to lower the cap on tenancy deposits to 5 weeks’ rent. We believe that a cap of 6 weeks’ rent will better support both landlords and tenants by giving landlords greater financial flexibility and security. A deposit of 6 weeks’ rent will of course be an upper limit and not a recommendation. We expect that landlords should consider on a case by case basis the appropriate level of deposit to take”.
“This will ensure that each and every agent is giving tenants and landlords the financial protection that they deserve”.