Tenant fee ban coming in June

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The inevitable has been confirmed this week as THE TENANT’ FEE BILL has now become law, receiving formal Royal Assent. In essence, this is a big milestone in the rental market and could have a number of consequences for landlords across the country.

With the number of renters across the UK higher than ever before and with ever-more tenants forecast to enter the property market over the next decade, the Government is taking steps to ensure that those who cannot afford to purchase their own property receive a fair deal when renting. The introduction of the Tenants Fee Bill, confirmed to start on June 1st 2019, is intended to increase the clarity around which fees are imposed upon renters – as a group they are collectively set to save millions of pounds thanks to the ban on some fees.


Communities Secretary James Brokenshire MP upon the announcement comments:

“Tenants across the country should not be stung by unexpected costs from agents or landlords. This Act not only delivers on our promise to ban letting fees but also caps deposits at five weeks’ rent and sets out how and when landlords can charge tenants fees – helping renters keep more of their hard-earned cash. This is part of our ongoing action to make renting fairer and more transparent and make a housing market that works for everyone.

Under the Act, landlords and agents are only able to recover reasonably incurred costs from tenants and must provide evidence of these costs before they can impose any charges.”

Shelter research shows that on average, private renters in England had to pay £246 in letting agent fees, and families had to pay even more. In the current climate of fiscal uncertainty, this amount of money can cause real difficulties for households – meaning that the proposed Bill could have a real impact upon the quality of life of many.

One of the changes which the Tenants Fee Bill will bring in to effect surrounds the deposits which renters are required to pay; with the introduction of the bill most tenants will pay no more than the equivalent of five weeks’ worth of rent as a deposit. This is lowered from what most agents and landlords take which is six weeks. There will also be restrictions upon agent themselves, including when they can charge default fees from renters. Landlords and agents will only be able to charge default fees specifically to replace lost keys or in the instance of late payments (with a default fee being applied if late rent hasn’t been paid within 14 days of falling due).

Landlords will still be able to claim back costs for damage through the tenancy deposit at the end of tenancy, the Government has announced. A landlord or agent will only be able to “recover reasonable incurred costs” and must provide evidence of these costs to the tenant before they can impose any charges.

This has been challenged extensively over the last 12-18 months, notably from ARLA who agree that costs for tenants have become excessive, particularly in southern regions of England but would have a wider implication to tenants.

Yes, in reading this you are may get those alarm bells telling you this will not suit landlords and its another potential restraint, this time potentially on the security of a tenant-whose current applicant costs are also a commitment to a property and indeed with reputable companies like ourselves that we use such costs to fund full tenants referencing. If tenants don’t pay referencing fees and set up costs of tenancies etc, are they to be vetted correctly?! ….and who does those costs be payable by? The Agent? The Landlord?

We have already taken the steps, at James Laurence, with clear guidance in place for current and future landlord clients so feel free to contact us at [email protected] or contact Andy McHugo, Associate Director on 0121 4565454 to discuss the effects this milestone has on you and your portfolio.

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