Ban on Lettings Fees to commence June 1st

Ban on Lettings Fees to commence June 1st

8:51 AM, 16th January 2019, About 3 years ago 65

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The Tenants Fees Bill 2017 – 2019, click here, has been confirmed by government to commence on June 1st this year. Bill sponsor Lord Bourne of Aberystwyth (image right) announced the start date at the third reading in the House of Lords and said:

“It has been clear throughout that this is a Bill that will introduce important changes for the private rented sector. It is in all our interest to introduce this introduction as soon as possible.

“Implementation is subject to the parliamentary timetables and amendments need to be considered in the other place. We need to enable agents and landlords following Royal Assent to become compliant, but we intend for the provisions to come into force on June 1st 2019.

This would mean the ban on lettings fees would apply to all tenancies signed after this date.

Agents and landlords will only be able to collect rent and deposits from tenants with the exceptions of fees for:

  • A change or early termination of a tenancy when requested by the tenant
  • Utilities, communication services and Council Tax
  • Payments arising from Default fees limited to charges for replacement keys or a respective security device, and late rent payments only

Lord Bourne also confirmed that although landlords can charge for damages any amount recouped from a tenant can only put them back in the same position they were previously.

David Cox, Chief Executive, ARLA Propertymark stated:

“This now gives agents the legal certainty they need to prepare for a post tenant fees ban world. To learn about the intricacies of the legislation, we encourage agents to come to our Regional Meetings over the next few weeks and of course our annual Conference, where ARLA Propertymark will be doing everything it can to help agents plan and prepare for the introduction of the Bill.”

James Davis, CEO of Upad and himself a portfolio landlord, comments:

“Having a firm date set for the Tenant Fee Ban to come in to effect feels like it’s been a very long time coming. However, now we know and it’s a little under 5 months away. This means that any landlord who has taken the ‘bury head in sand’ approach thus far, needs to act quickly.

“Ever since the ban was first announced in November 2016, headlines have focused on the threat that rents will rise, putting additional pressure on tenants and continuing to paint the landlord as the ‘bad guy’. This doesn’t need to be the case though. Most private landlords don’t, in fact, charge excessive upfront costs and whilst it would have been advisable to plan ahead before now, there’s still time to consider how else they can manage their costs.”



Comments

by Ian Narbeth

10:27 AM, 18th January 2019, About 3 years ago

Reply to the comment left by wanda wang at 17/01/2019 - 20:54
Wanda, you have misunderstood. The Tenant Fees bill is about prohibiting upfront fees (such as for referencing and preparing the tenancy. It does not apply to deductions for unpaid rent or breaches of the tenancy such as cleaning. You will of course have to protect the deposit with the DPS or another scheme and they have a mechanism for resolving disputes if the tenant disagrees with the deduction.

by Luke P

11:58 AM, 18th January 2019, About 3 years ago

"After one year the ban will attach to pre-existing tenancies and clauses that charge fees in them will become ineffective."

by Arnie Newington

10:02 AM, 19th January 2019, About 3 years ago

In Scotland the tenant fee ban has been good news for landlords and bad news for letting agents and tenants.
Letting agents used to charge 15% management fees to the landlord but this went down to 10% as income from tenants for referencing etc made up the difference. Following the ban letting agents were unable to charge tenants or raise the amount they charged landlords due to competition.
Tenants had more money in their pockets when trying to secure a tenancy but unfortunately so did all the other tenants competing for the same properties so rents went up.
Landlords benefitted from the increased rents and the inability of letting agents to pass on fees to them and thus became the winners of the tenant fees ban.

by Annie Landlord

10:20 AM, 19th January 2019, About 3 years ago

Reply to the comment left by Arnie Newington at 19/01/2019 - 10:02
Thanks for that insight Arnie. Most of the anti-PRS factions laud the Scottish system as being tough on landlords and great for tenants. Clearly they're not doing their research

by Jim S

10:55 AM, 19th January 2019, About 3 years ago

Reply to the comment left by Ian Narbeth at 18/01/2019 - 10:27
Hi Ian,
My understanding is that is that the ban not only includes any charges for "up front fees" but also "Default fees" for instance writing letters to several guarantors for none payment of rent, bounced cheques, phone calls to chase rental payments, emergency call out to the property to open doors for tenants who have lost keys etc.
Now with regards to damages, from what I understand a tenant may kick in a kitchen door and after you have paid the bill you can not charge them for the cost and receive any money even if they want to pay you. To get your money you have GOT to deduct it from a deposit or go through the courts.
Correct me if I am wrong!

by Arnie Newington

11:02 AM, 19th January 2019, About 3 years ago

Reply to the comment left by Annie Landlord at 19/01/2019 - 10:20
That’s correct before government interference rents were rising below inflation now they have skyrocketed especially in Edinburgh.

I have a friend who rents a property from their mums friend she doesn’t comply with any regulation and lets them do whatever they like with the place and doesn’t put their rent up.

When my friend tells other tenants about this they are all like wow I wish we had that. At the end of the day what tenants want is somewhere safe, convenient and affordable. By over regulation the properties are safe but not affordable which means people might then have to commute do they aren’t convenient either.

The anti landlord lobby in Scotland have really made life a lot harder for tenants.

by AA

19:30 PM, 20th January 2019, About 3 years ago

Reply to the comment left by Arnie Newington at 19/01/2019 - 11:02
The rents sky rocketed in Edinburgh because it is principally a student market. As students leave for summer LL's priced in a void period. Simple.

by Annie Landlord

10:40 AM, 21st January 2019, About 3 years ago

Reply to the comment left by AA at 20/01/2019 - 19:30
I thought the new mandatory indeterminate tenancy agreement in Scotland means landlords can't offer students an 11 month tenancy and rent out in August for the Festival goers? I'm wondering what the impact of that is going to be. I have kids in Edinburgh who rented for years (small flat/£1100pm) but have just managed to buy (£200K for a tiny 4th floor flat) There are a lot of young professionals as well as students in the city, particularly working in finance

by Yvonne Francis

11:54 AM, 21st January 2019, About 3 years ago

Reply to the comment left by AA at 20/01/2019 - 19:30
Following on from the comment made by Annie, please can you tell me Arnie if the three year tenancy now in Scotland applies to student accommodation in the PRS. There is a lot of talk about this coming to England and there are suggestions that exceptions could be made for certain sectors one of them students. But it has recently crossed my mind that this will only apply to university accommodation and specially build student accommodation and not the PRS.

If no exception is made for student accommodation in the PRS then I believe life as a landlord letting to students will be difficult or even finished. Letting in November for the following years tenancy which avoids little or as in my case no void period would be impossible but even more seriously, if tenants are allowed to give notice at the end of their summer term then there would be no chance of re-letting to students in the following tenancy as students by then would have left for the summer vacation.

If you are wondering by now where will students go if not the PRS then they will go into their university accommodation or expensive purpose built blocks. I already take students who have been offered university accommodation but choose to live in my houses.

You say it is simple for landlords to price in a void period but if the position is three year leases then surly it is a problem if you can not predict the length of that void.

Any information on this problem from landlords renting to students in Scotland would be greatly welcome. Apologies for diverting from the original post.

by Ian Narbeth

12:06 PM, 21st January 2019, About 3 years ago

Reply to the comment left by Jim S at 19/01/2019 - 10:55Jim
I shall assume the relevant parts of the Bill are incorporated in the Act when passed. Paragraph 5 of Schedule 1 says:
"A payment of damages for breach of a tenancy agreement or an agreement between a letting agent and a relevant person is a permitted payment."
Paragraph 4 of Schedule 1 deals with two specific defaults: loss of key/security device and late payment of rent. (These will usually also be defaults under the tenancy agreement but the Bill will restrict what landlords can charge.) For replacement keys the amount must not exceed costs that are reasonably incurred by the landlord or letting agent as a result of the default. (This might include replacing locks if that cost is reasonably incurred.) Evidence in writing must be provided to the person liable to pay.
The payment for late payment of rent is limited to interest at 3% over Bank of England base rate. This seems to exclude charging a fixed amount for sending a late payment letter to the tenant or guarantor.


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