Tenant Fees Ban – Measures affecting Landlords and Agents

by Property 118

9:11 AM, 7th May 2018
About 6 months 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

jeanette Kirkby

10:02 AM, 12th May 2018
About 5 months ago

Reply to the comment left by Mark Alexander at 10/05/2018 - 14:46
I agree

Tim Wragby

12:46 PM, 12th May 2018
About 5 months ago

Reply to the comment left by Nic Burrows at 12/05/2018 - 09:52
Nic
Unfortunately you will not be able to legally make any charges to the tenants or their third parties. If you read the legislation you will see that it states only what is permitted and by default everything else is breaking the law. You will have to do your sums and work out what all your additional costs are and wrap it into your rent which is the sole income source permitted. And you cannot reduce the rent later in the tenancy as you would be liable for repaying the total excess balance back before you serve a valid section 21 and be potentially liable for penalties as well.

Tim Wragby

12:49 PM, 12th May 2018
About 5 months ago

Reply to the comment left by jeanette Kirkby at 12/05/2018 - 10:01
You cannot charge your tenant but could charge the requesting agent or landlord. If your tenant is not referenced and unable to move however that too could become an issue for you if you were the one seeking to move them on

Nic Burrows

8:45 AM, 14th May 2018
About 5 months ago

Reply to the comment left by Tim Wragby at 12/05/2018 - 12:46
Most of out tenancies start out as 6 months, so if the tenant renews for a further 6/12 months is that then an opportunity to legitimately reduce the rent? as it is now a new agreement.

Julia

14:43 PM, 15th May 2018
About 5 months ago

At the beginning of this blog, point two states 'capping the amount that can be charged for a change to tenancy at £50 unless the landlord demonstrates that greater costs were incurred', which indicates that £50 can be charged? Is this correct?

Tim Wragby

18:06 PM, 15th May 2018
About 5 months ago

That is the proposal - it has yet to be written into law but I doubt it will be watered down as there is little sympathy in Westminster for the PRS which in their eye is akin to the fat cats & MP’s expenses candles of the past. We’re all victims of the excessive greed of a significant few agents & to lesser extent landlords but it is fairly draconian by design - tenants Will be facing unwelcome rent rises it is still a matter of debate of by how much

Nic Burrows

23:25 PM, 15th May 2018
About 5 months ago

Reply to the comment left by Tim Wragby at 15/05/2018 - 18:06
The increase in rent will in a lot of cases need to cover over six months of rental payments what the tenant fee would have been. Where the fees charged to tenants was not too high it shouldn’t be a problem but there are agents in our area who currently charge nothing to the landlord in order to get their business, making all their money from the tenant.

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