Tenant Fees Ban – Measures affecting Landlords and Agents

by Property 118

3 weeks ago

Tenant Fees Ban – Measures affecting Landlords and Agents

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Tenant Fees Ban – Measures affecting Landlords and Agents

Government press release on the action to end letting fees.

New Housing Secretary Rt Hon James Brokenshire MP said: “This government is determined to build a housing market fit for the future. Tenants across the country should not be stung by unexpected costs.

“That’s why we’re delivering our promise to ban letting fees, alongside other measures to make renting fairer and more transparent.”

Key Measures of the Bill:

Bring an end to letting fees and save tenants around £240 million a year, according to government figures.

The deposit at the start of the tenancy cannot exceed 6 weeks’ rent.

Along with

  • capping holding deposits at no more than one week’s rent. The Bill also sets out the proposed requirements on landlords and agents to return a holding deposit to a tenant
  • capping the amount that can be charged for a change to tenancy at £50 unless the landlord demonstrates that greater costs were incurred
  • creating a financial penalty with a fine of £5,000 for an initial breach of the ban with a criminal offence where a person has been fined or convicted of the same offence within the last 5 years. Financial penalties of up to £30,000 can be issued as an alternative to prosecution
  • requiring Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees via the First-tier Tribunal
  • prevents landlords from recovering possession of their property via the section 21 Housing Act 1988 procedure until they have repaid any unlawfully charged fees
  • enabling the appointment of a lead enforcement authority in the lettings sector
  • amending the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla
  • local authorities will be able to retain the money raised through financial penalties with this money reserved for future local housing enforcement

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

All proposals relate to England only. The ban on letting fees will apply to assured shorthold tenancies and licences to occupy in the private rented sector.



Comments

James Mann

3 weeks ago

I am not sure how this will help tenants! More reasons to reduce the size of the private rented sector and the amount of property available.

Monty Bodkin

3 weeks ago

As pointed out on another thread, some tenants will be winners and some tenants losers of this fee ban. The report acknowledges there will be a 'pass through' rent increase.

The winners will be the richer rent generation who tend to move frequently. (And incidentally, those screaming loudest.)
The losers will be the poorest families at the bottom end of the market who tend stay in one place.

E.g Move 10 times save 10x £250 fees = £2500 - £1200 (tenner a month pass through rent increase over 10 years)
Move once, save 1x £250 fee = £250 - £1200 (tenner a month pass through rent increase over 10 years)

So the rent generationer will be over a grand better off.
Paid for by the family on minimum wage who will be a grand worse off.

Kerching! Double Lattes and avocados all round.

N.B don't agree with rip-off fees but this is the wrong way to go about tackling them.

simon cheeseman

3 weeks ago

So can someone please clarify where private landlords who vet & reference their own applicants will stand with the charges they incur when referencing an applicant ?? At present we charge £35 administration plus the £29 fee we are charged by the referencing company for a full reference and it has weeded out some of the most professional liars I have ever come across !! are we as Landlords expected to pay for every Tom Dick & Harry who says " I'll take it " and tells you a pack of lies hoping you won't follow up on his references only to cost us £29 for the privilege of finding out he's a bankrupt with more CCJ'S than an episode of Can't pay we'll take it away.
I understand the Government clamping down on greedy Letting Agents with all their " add ons " but where demand still appears to be outstripping supply it is a clear no brained Rents will rise !!!

As far as I am aware other than the proscribed allowable charges ie a holding fee (1 weeks rent max) and a Deposit (6 weeks max) Landlords or Letting agent s cannot charge anything else, they will not be allowed to charge say a higher first months rent.

Monty Bodkin

3 weeks ago

Reply to the comment left by simon cheeseman at 07/05/2018 - 11:28
Landlords will pre-select tenants even more than currently. Applying for a property will be like applying for a job.
No 'C.V', no viewing.
From the report;

"Landlords and agents are prohibited from requiring a tenant to pay for a third party service but the Bill does not prevent tenants from procuring their own services, for example paying for their own reference check or inventory. Some tenants may indeed choose to do so to demonstrate they are financially and legally able to meet the terms of their tenancy and give themselves a competitive edge in the market."

Sue Marven

3 weeks ago

I’m guessing referencing costs will be allowed as I won’t let to anyone without them passing referencing and that costs me money to get it done.

Monty Bodkin

3 weeks ago

Reply to the comment left by Sue Marven at 07/05/2018 - 15:38You're guessing wrong then Sue, it is a specific ban on referencing costs;
"The policy objective is to ensure that tenants are only required to pay their rent and deposit when securing a property in the private rented sector."

Tim Wragby

3 weeks ago

Neither a landlord nor an agent will be able to charge a tenant to be referenced as a fee separate to prescribed fees - ie rent, 6 weeks deposit etc.
You will be able to charge 1 weeks holding deposit which can be retained only in some very precise circumstances laid out in schedule 2 to the Act.
It has been written very carefully to prevent landlords or their agents getting round the Act with “a Cunning plan” and anyone found out making an unlawful charge will not be able to act on it until the tenant has been paid back in full (+ interest).
Once passed you will have to calculate your costs and incorporate them into your rent charged and hope than a you can find a tenant willing to pay it. You at also not allowed to charge a higher rent for first rent and reduce later either so it will be an “interesting “ time for the first few months as tenants get used to a step change in rents.
For landlords who use agents you will also most likely see a dramatic change in agency fees as agents will be trying to cover 10s of thousands of pounds for a small to medium agency and large agencies hold face an income gap of £100,000+. For National corporates it will be eye wateringly large!
As posted above the low income long staying tenants are going to lose most. The only advantage is that tenants will spread out the cost of moving over months but the charges will have to be met

Monty Bodkin

3 weeks ago

Reply to the comment left by Tim Wragby at 07/05/2018 - 16:23
"large agencies face an income gap of £100,000+. "

Quite pleased about that bit.
A large part of that gap will be filled by increasing rents so as a self managing landlord, I'll get a taste of that.
Helps pay the section 24 bill.

Michael Holmes

3 weeks ago

Wonderful isn’t it. Another attack on Landlords, straight out of the neo-Marxist handbook! This is a Conservative Government apparently! Incontinent legislation activity seems to be the order of the day. I don’t take a deposit for my student letting, Just ask for 2 months in advance rent, does this mean I will. be restricted to 6 weeks now?

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