Following the second reading of the Tenants’ Fees Bill in the House of Lords last week, Citizens Advice have come out swinging. The charity is now arguing for even stricter regulation, following a claim that over a third of tenants are only told about additional fees that could be charged during their tenancy after putting down money.
Following a chorus of outrage from organisations with little understanding of the lettings sector, Citizens Advice argue that tenants are easily “trapped” into unfair contracts by agents and landlords, resulting in considerable fines if the contracts are breached.
Highlighting individual cases of unfair tenancy terms, some contracts have included clauses ranging from a fine for failing to update a landlord with contact details, to a £50 charge for a written notice if a term is breached.
The charity also conducted a small survey which found:
· 23 per cent of tenants have received a tenancy contract they felt contained unfair terms, but more than half of them signed the contract anyway;
· A third of renters signed a tenancy agreement with their landlord or letting agent without fully understanding it.
Ultimately, the charities aim is to highlight individual cases of bad practice in order to argue against the default fees clause in the Bill. What the charity calls “unfair terms”, really means landlords and agents charging for reasonable costs when tenants break on a contract term.
The charity also fails to address how landlords or agents will need to provide proof of reasonable costs incurred, such as a receipt for any property maintenance or tenant issues. As the Bill progresses the Government will be drafting guidance on what landlords and agents will be able to charge for. Potential options include billing to replace lost keys or for their time.
Despite this, the charity wants the government to significantly tighten this clause to give tenants and landlords greater clarity on what terms landlords can charge reasonable costs.
“In no other consumer market would people be asked to put down hundreds, or even thousands, of pounds before seeing the small print. Unscrupulous landlords and letting agents can take advantage of tenants, who lack real bargaining power in the private rented sector” says Gillian Guy, chief executive of Citizens Advice.
“Tenants shouldn’t be forced into a game of rental roulette, where they are putting down money on a contract they’ve not seen. For the Tenants’ Fees Bill to truly stamp out unfair fees as intended, the government must close the ‘default fees’ loophole.”
The Bill is likely to come into law next autumn.
Speaking on the results of the study, Chris Norris, Director of Policy and Practice at the National Landlords Association, said:
“It is in the interest of all parties to have an agreement that everyone is happy with and that is clear about default fees that may be charged during the tenancy. Tenants should feel comfortable questioning any clause in the agreement and should have the opportunity to ask a third party for advice.
“Default fees are necessary for landlords to recover any costs they incur on the tenant’s behalf during a tenancy. Common sense should be applied to these fees, but it is unrealistic to expect that landlords would not seek to recover any costs which arise due to their tenant’s actions.
“Removing the default fee clause would push landlords either to seek to recover their costs elsewhere – through higher rents – or to become increasingly discerning about the tenants that they will let to, reducing accessibility of the private rented sector for those who need homes.”