Parliamentary Under-Secretary of State in the Ministry of Housing, Communities and Local Government, Lord Bourne of Aberystwyth announced that the ban on tenant fees will apply to all tenancies commencing on or after 1 June 2019.
What fees are banned under the tenant fee ban?
The complicated way of clarifying what is banned under this new legislation is that anything the tenant (or guarantor) is asked to pay as part of the ‘grant, continuance, assignment, termination or renewal of the assured shorthold tenancy.’
Tenant Fees Bill
The Tenant Fees Bill sets out the government’s approach to banning letting fees for tenants. The key measures of the bill include:
- Security deposits must not exceed the equivalent of five weeks’ rent.
- Holding deposits will be capped 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
- The amount that can be charged for a change to tenancy will be capped at £50 unless the landlord demonstrates that greater costs were incurred
- 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
- Trading Standards will enforce the ban and will make provisions for tenants to be able to recover unlawfully charged fees via the First-tier Tribunal
- Landlords are prevented from recovering possession of their property via the section 21 until they have repaid any unlawfully charged fees
- Enabling the appointment of a lead enforcement authority in the lettings sector
- The Consumer Rights Act 2015 will be amended to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla
- Local authorities will be able to ring-fence any money raised 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 keys.
As a result of tenant fees ban unfortunately this will most likely see an increase in the charges passed across to the Landlord which in turn would be passed back to the tenant in the form of higher rental increases.