EYE NEWSFLASH: Tenant Fees Bill introduced into Parliament

The ban on letting agent fees charged to tenants is getting closer, with the Tenant Fees Bill introduced into Parliament this afternoon.

The new Secretary of State for Housing, Communities & Local Government, James Brokenshire, has published it, saying that the ban will save tenants around £240m a year.

The Bill will also seek to cap deposits at the equivalent of six weeks’ rent. It is likely to become law next year.

In a separate impact statement, also published this afternoon, the Government said the ban would cost letting agents £157.1m in the first year.

Brokenshire 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.”

The statement goes on:

The Tenant Fees Bill will stop letting agents from exploiting their position as intermediaries between landlords and tenants, and prevent unfair practices such as double charging for the same services.

It will also help to increase competition between agents and landlords, which could help drive lower costs overall and a higher quality of service for tenants.

Other key measures in the Bill, which reflects feedback from a recent public consultation and pre-legislative scrutiny from the Housing, Communities and Local Government Select Committee, include:

  • 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

The new measures are subject to Parliamentary timetables and will be introduced in law next year.

 

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17 Comments

  1. eduardo

    Oooooooh, isn’t he an effective minister. He’ll probably try to claim it was all his idea. (And then deny it when tenants complain that it has pushed rents up)

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  2. Simonr6608

    It will also help to increase competition between agents and landlords, which could help drive lower costs overall and a higher quality of service for tenants.

    How have they come to this conclusion, the agents that charge low landlord fees and sky high tenant fees will probably fall by the wayside with that business going to others. Less agents will mean higher costs to landlord which in turn will translate into higher rents so really tenants will be worse off. Surly a cap on fees would have been a more sensible option.

     

    The Bill will also seek to cap deposits at the equivalent of six weeks’ rent.

    As most landlords ask for additional deposit for tenants to have pets in the house by doing this landlords will just refuse this request, once again the tenant loses out.

     

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  3. jeremy1960

    Oh my, how many times have we as agents charged for a lost key?? Probably twice or 3 times a year – that’ll make all the difference!

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    1. CountryLass

      So what happens if a tenant locks themselves out and needs us to come with our management key to let them in? Can we charge for that? If not, sorry Mr Tenant, do you want me to find the number of a locksmith for you? And no, we wont be paying or reimbursing you for it, and you will be responsible for any damage to the door and providing us with new keys.

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  4. CountryLass

    ever since this was introduced I have said that it will be Tenants losing out.

     

    Also, can someone explain why we as agents are going to be losing £160million, but the Tenants are saving £240 million? Where did they get these figures from? Neptune’s neighbour?

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  5. James Morris

    Once again the government meddling in things which they do not fully understand.

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  6. Dene

    Nothing but a headline grabbing vote winner for the weak Conservitive government who stole the idea from a weak Labour Party who stole the idea from Scotland. They are absoultey clueless if they couldnt work out that a cap would of been the answer.

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  7. RichardHill61

    I’d love to go to parliament, explain the letting business to the politicians and then tell them the idiots behind these silly ideas are exactly that!!

    The numbers are a joke too! I’d say the overall loss to the industry will be in the billions!!  £240m will be roughly what the government will lose in VAT revenue let alone tax!

    Cupid Stunts!!

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    1. CountryLass

      It’s things like this that make me feel that you shouldnt be able to be Minister for something you have no experience of. For example, I think I could do a good job as Health Minister. I’ve never worked in a hosptial, but I have spent too much time in them both myself and members of my family. That makes me qualified, right? OOOH! I’ve been abroad, I could be Secretary of State!
      See? Ridiculous.
      I’m glad I’m not the only one who has looked at tax, but I think they may end up getting more… Simply because as rents rise, managed fees will rise and VAT on them will rise too. Never mind the poor tenants who will end up paying more over the long run as a direct result of it…
      I really would love to go with you to speak to Parliment….

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  8. Will

    As David Essex sang:  Oh what a circus oh what a show……..

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  9. Will

    Can’t match Boris. Should have advertised the tenant savings on the side of a bus!

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  10. TheAgent48

    Simple solution for agents and landlords, do as we intend to do.

    Increase the letting fee from 10% to 14% advising the landlord that as we charged tenants in the past and are no longer allowed to, to continue managing your property we intend to increase the rents across the board to cover the additional charge to you the landlord.  In this instance the rent is £400pm now rising to £425pm.  The landlord sees none of the additional costs this is borne by the tenant.

    If everybody followed this principle the “tenant fees” would be simply added to the rent as they should be.  Incidentally the only losers then would be the long term tenants.  Well done UK government unintended consequences.

    This is quite legal and if done universally no landlords or agents will lose out.

    Well done shelter…..cracking job!!!!

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    1. CountryLass

      TBH, that has been my plan as well…

       

      Let’s not forget that we have to pay VAT on the extra management charge, at the higher rent… Who gets the VAT? That’s right, the government…

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  11. David M

    Late payment charges???

     

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  12. ElTel

    As a lifelong Conservative voter I cannot ever recall a government as inept as this one – across all parties.  There is not one minister I would vote for.  As previously stated the fees ban debacle was nicked from Labour and the mantra ‘well it worked in Scotland’ is a prime example of ‘fake’ news at work – just ask our industry colleagues working north of the border.  From Grenfell to Windrush the incompetence of government and civil service departments beggars belief.  I feel so sorry for our children who are left with the mess.

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  13. jeremy1960

    In the past we would have said use your vote at the next election but it seems now every political party has the same agendas . Politicians have all become more inward looking all have an attitude of I’m alright so sod the rest of you! Time for a fairer system of gov that actually acts for the electorate not just to line their own pockets and egos.

    I hope that as a result of this selfish vote grabbing bill every mp is inundated by tenants complaining that their rents have become unaffordable and that there are no rental properties available.  Perhaps these fat cat self centred idiots will take in a few of these tenants without references without credit checks and without charging rent because no one else will!

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  14. pierce

    @TheAgent48

    “Well done shelter…..cracking job!!!!”

    Lets not forget Vicky Spratt who campaigned “Long & Hard” to get this through to Parliament 😉

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