What Does The Tenant Fees Bill Mean For Me?
Posted on 15th October 2018 at 12:12
Tenant Fees Bill Explained
Last week we saw a second reading in the House of Lords in respect to passing a new law.
The Tenant Fees Bill, predicted to be put in place in 2019, is gathering pace and has had cross-party support (apart from some organisations who represent landlords and letting agents).
The chancellor, Phillip Hammond announced that he would ban letting agent fees in England and Wales in the 2016 autumn statement. The bill was eventually conceived to put a stop to extortionate fees charged by landlords and letting agents.
In England (fees have been illegal in Scotland since 2012), there is no cap on the amount of money a letting agent can charge when renting a property, often causing renters to pay hundreds or even thousands of pounds more than they need to. From a renter’s perspective this has always been more of an inconvenience than anything else, and something that was widely accepted as the norm.
The end goal is to see all upfront fees banned. So, you won’t be expected to pay fees for ‘admin’, ‘credit checks’, ‘referencing’, or ‘tenancy renewal.’ Which will be music to the ears of many experienced renters! The only fees that will be allowed are: the rent, a refundable holding deposit, and a refundable security deposit, which will be known as ‘default fees.’
If you’re worried that this will mean that the letting agents will just increase the deposit amount, then have no fear! There will be a cap on deposits too. The fees will be capped at a maximum of six weeks rent for security deposits and one weeks rent for holding deposits. Also, the fees may not amount to any more than £5,000.
What does this mean for Landlords and Agents?
Landlords who manage their own properties will have to adhere to the new guidelines as well as letting agents.
Many letting agents have said that the new law may result in job losses, increased rental fees, and a poorer service. ARLA have also said that landlords will likely put the rental prices up to recoup the money that they would have made usually from charging fees. It certainly seems that the renter is the big winner here, with approximately £240m expected to be saved per year.
It’s no secret that letting agents also charge landlords extra fees, which is where it may get a little messy for the renters. Having said that, local authorities will be responsible for enforcing the new laws and keeping an eye on rental prices, so depending on how vigilant they are, we may see very little in terms of rental cost increases.
If letting agents or landlords are guilty of charging unreasonable fees after the law is put in place, fines start at £5,000 for a first offence and can end in a criminal prosecution for continuous offenders.
What does this mean for Renters?
In short, you'll have more money to Feng Shui the heck out of your new home, buy a beer fridge, get a cat, and maybe a novelty doorbell.
When will this happen?
Hopefully in early/ mid-2019. The bill will be moved to the committee stage in the House of Lords on 5th November, and after that, it will require two more stages before becoming a law. So landlords and letting agents really should start preparing for a very different world!
You can keep up-to-date on the progress of the bill here: https://services.parliament.uk/bills/2017-19/tenantfees.html
Share this post: