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.”


by Yvonne Francis

12:09 PM, 21st January 2019, About 3 years ago

Reply to the comment left by Annie Landlord at 21/01/2019 - 10:40
Annie, from all I know I do not think working people will be affected as they would sign a three year lease and as tenants they can give notice after six months. It is the landlord who cannot get them out except under certain circumstances. As for students then that is another problem which I have just posted about. If the student market in the PRS is not exempt then quite frankly I think landlords will move out of this market and rent to working people. As for the festival goers if you wish to rent most of the year then there could be no certainty that the property could be empty except at the last moment. That may well work out OK but it is certainly uncertain and the extra cash from festival goers you may have generated could not be relied on.

by Luke P

14:44 PM, 21st January 2019, About 3 years ago

Reply to the comment left by Ian Narbeth at 21/01/2019 - 12:06
Ian, are you saying we *would* be able to make a charge of a fixed amount for sending a late payment letter to the tenant or guarantor in your view?

by Ian Narbeth

16:15 PM, 21st January 2019, About 3 years ago

Reply to the comment left by Luke P at 21/01/2019 - 14:44Hi Luke
My reading is that you can only charge interest at no more than 3% over base rate on the late rent. You will not be able to charge a fixed fee of say £20 for sending the late rent letter. You kindly linked to the Bill in an earlier post. I set out relevant parts with my NOTES below. Paragraph 4 of Schedule 1 reads:
START QUOTE 4(1) Subject to sub-paragraphs (3) to (8), a payment in the event of a relevant default by the tenant is a permitted payment if the tenancy agreement requires the payment to be made. NOTE 1
(2)In this paragraph “relevant default” means—
(a)the loss of a key to, or other security device giving access to, the housing to which the tenancy relates, or
(b)a failure to make a payment of rent in full before the end of the period of 14 days beginning with the date (“the due date”) on which the payment is required to be made in accordance with the tenancy agreement. NOTE 2
(4)If, in the case of a payment required to be made to a landlord or a letting agent in respect of a relevant default within sub-paragraph (2)(b), the amount of the payment exceeds the amount determined in accordance with
sub-paragraph (5), the amount of the excess is a prohibited payment. NOTE 3
(5)The amount referred to in sub-paragraph (4) is the aggregate of the amounts found by applying, in relation to each day after the due date for which the rent remains unpaid, an annual percentage rate of 3% above the Bank of England base rate to the amount of rent that remains unpaid at the end of that day. END QUOTE
NOTE 1. Subject to sub-paragraphs (3) to (8), payments required under the tenancy for default are permitted payments under this Act.
NOTE 2 However two types of payment - for lost keys and for late payment of rent - are subject to different rules.
NOTE 3 For late payment of rent, if you charge more than is permitted in sub-paragraph (5) the excess is a prohibited payment.

by AA

19:02 PM, 21st January 2019, About 3 years ago

Reply to the comment left by Annie Landlord at 21/01/2019 - 10:40
Correct - so the assumption is students will stay from August to June. Hike the rent to cover void month.

by Luke P

22:24 PM, 21st January 2019, About 3 years ago

Reply to the comment left by AA at 21/01/2019 - 19:02
But there’s no guarantee in the New Year when those that start to look for their accommodation for the coming August that the LL can guarantee the property will indeed be vacant.

by Yvonne Francis

11:17 AM, 22nd January 2019, About 3 years ago

Reply to the comment left by AA at 21/01/2019 - 19:02
Why do you not read the reply I made to you on 20/01/2019. Luke puts the problem in a nutshell. Adjusting the rent due to a void period when you had fixed term tenancies is obvious. However if you can not offer fixed term tenancies in the PRS in Scotland then never mind worrying over a void period as you do not know what void period you are going to have and you cannot as Luke says book new student tenants in November for the following summer as we did in the past.

by AA

8:34 AM, 23rd January 2019, About 3 years ago

Reply to the comment left by Luke P at 21/01/2019 - 22:24
Absolutely correct so the question arises as in a previous thread when can you sign up and not be on the hook. I am currently advertising for a couple of HMO student properties, one through deliberate misrepresentation ( they wanted the flat until June but stayed 3 months and the other fell out with each other) but all the enquiries, and there have been many, for to secure a flat in August / September.

by Arnie Newington

9:04 AM, 23rd January 2019, About 3 years ago

Reply to the comment left by Yvonne Francis at 21/01/2019 - 11:54
Hi Yvonne I think that for most student landlords it will still be business as usual.

The first point is their is no exemption for Student landlords. Annoyingly purpose built student accommodation and university accommodation is exempt. There is the option for landlords to let to the University who can still do fixed leases.

So far the amount of student properties that have ended early are very low but they do prove a real problem to relet.

This will be the first year with the new legislation for student accommodation and whilst before we used to know about this time what students were leaving this year we haven’t really heard back from them.

I do though think the market will adjust and it will be ok.

by Ian Cognito

10:26 AM, 23rd January 2019, About 3 years ago

The following sub-sections are lifted from the Bill:
(7) For the purposes of this section, a landlord does not require a relevant person to make a payment, enter into a contract or make a loan if the landlord gives the person the option of doing any of those things as an alternative to complying with another requirement imposed by the landlord or a letting agent.
(8) Subsection (7) does not apply if—
(a) the other requirement is prohibited by this section or section 2 (ignoring 35subsection (7) or section 2(6)), or
(b) it would be unreasonable to expect a relevant person to comply with the other requirement.
My reading of this, is that a referencing fee can be asked for provided the prospective tenant is offered a reasonable alternative.
That reasonable alternative could be the prospective tenant providing a recent credit check, employer reference, landlord reference, 3 months bank statements etc.
If the referencing fee is set at a sensible level (maybe even subsidised by the landlord) then any sensible and genuine prospective tenant is likely to take the easy route and pay the referencing fee.

by Rosanne Turvey

11:54 AM, 23rd January 2019, About 3 years ago

I give up! - I'm selling all my 11 properties.

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