EYE NEWSFLASH: Government publishing Bill today to ban lettings fees

Lettings agents in England will face civil and criminal charges for flouting a ban on fees, the Government has revealed as it publishes its Draft Tenants’ Fees Bill today.

It will create a civil offence with a fine of £5,000 for an initial breach of the ban, and create a criminal offence where an agent has been fined or convicted of the same offence within the past five years. Penalties of up to £30,000 can be issued.

A ban on lettings fees to tenants was first announced a year ago and there was a consultation in June answered by 4,700 respondents.

The Government has also launched a consultation on making membership of client money protection schemes mandatory for letting and managing agents that handle client money.

The Bill will:

  • Cap holding deposits at no more than one week’s rent and security deposits at no more than six weeks’ rent. The draft Bill also sets out the proposed requirements on landlords and agents to return a holding deposit to a tenant.
  • Create a civil offence with a fine of £5,000 for an initial breach of the ban on letting agent fees and create a criminal offence where a person has been fined or convicted of the same offence within five years. Civil penalties of up to £30,000 can be issued as an alternative to prosecution.
  •  Require Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees.
  • Appoint a lead enforcement authority in the lettings sector.
  • Amend the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla.

The full draft bill can be viewed here

https://www.gov.uk/government/publications/draft-tenants-fees-bill

 

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15 Comments

  1. anon-mon73

    So does this put us any closer to knowing the timescale for the ban?

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    1. Rosalind Renshaw

      We are asking DCLG about the likely timescale and will update this story as soon as we can.

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      1. Rosalind Renshaw

        We are still asking DCLG about a likely timetable but can update you with a response given by housing minister Alok Sharma this morning. He said: “We will provide more information on the implementation timetable following scrutiny of the draft Bill.”

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  2. The Outsider

    With Trading Standards enforcing the ban, no one should be too worried.  Austerity has cut them back to one man and his dog.

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    1. AgencyInsider

      You might want to rethink that view Outsider. TS won’t have to go looking. Every potential and real tenant will be there to report infractions.

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  3. Woodentop

    Absolute nuts. There are many good agents all over the UK who did not rip tenants off, regrettably many agents including big names did rip tenants off and we all now suffer. Many Landlords are part-time landlords who will see this as yet another issue of concern. A ban on referencing fees will open the flood gates for rogue tenants …. just nuts and demonstrates that Government hasn’t a clue what they are doing and pandering to the wishes of rogue charities who have a long history of being anti-landlord and using donation money to run an organisation that assists in causing loss to legitimate and reasonable landlords.

     

    If they wish to make it a criminal offence for letting agents, what about making it a criminal offence for tenants and accomplice’s to defraud rent repayments and criminal damage to property. Then we wouldn’t need to worry about rogue tenants?

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  4. RealAgent

    So can anyone explain to me the point of a holding deposit that has to be fully refundable?

     

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    1. JWVW

      Holding deposits are a bit fiddly, but “show me the colour of your money” may be a way of avoiding tenants putting in offers all over the place.

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    2. Woodentop

      At first a good idea if you want to stop a tenant from making multiple applications. However you have to return it if a tenancy is not taken up after 15 days (different date can be agreed between both parties). You have to deduct it from first months rent if you don’t return it. The important bit is the tenant has to enter into the tenancy agreement, no matter what, if they don’t they get the money back within 7 days. I see holding deposits will become the norm to try and weed out time wasters but the savvy rogue tenants will quickly learn they get it back and the penalties are server if not.

       

      There is nothing in the draft bill to allow a fee for referencing ….. a very, very big mistake. Oh and the bill only applies to England.

       

      Interesting opening to the draft  ….

      But whether you’ve been forced into life as a tenant or simply decided that it’s the best option for you, you deserve to know that you will be treated fairly and not ripped off by the people you rely on for finding and renting your home.

      I think the tone of ripped off says a lot about the attitude of the Housing Minister and his understanding of lettings industry. There are many landlords and lettings agents who have never ripped off tenants. The tone of the bill has  a hint of being drafted by someone who is in rented accommodation living in London!

      The ban will make renting fairer and easier for tenants by allowing them to see upfront what a given property will cost them – the rent that is advertised will be what you are expected to pay, nothing more.

      This is at odds with the already introduced requirement for fees to be made clearly available to tenants. If any agent isn’t doing that, well there is already a law to take action against them, so why go this route. They are also making it a condition under the bill that a third party web portal (RM for example) has to show all fee’s or a link to the agents own web site, where they can be found. Again the consumer can see the total fees, the landlord can compare letting agents who they want to instruct.

      This is nothing more than draconian measure where politician’s who fiddle their expenses and sexually intimidate their own employees know better how a business should be run. For those politicians that don’t fit those categorise  …. sorry you are all branded as equal, just as we are by you?

       

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      1. Woodentop

        Any letting agent or landlord who wants to cover referencing fees’ will start to increase rents. They will make more money in the long run than a fixed fee at the beginning. The successful tenants will end up paying for the failed tenancies (possibly paying for none that came before them!) and paying more than a fixed fee at the beginning.

         

        Notably landlords/agents can’t change any other payment during the term of the tenancy unless confirmed in the tenancy agreement. Agents may want to look at their agreements for abortive call outs etc, as it looks like you can’t claim for expenses incurred by time wasting tenants or more importantly where the tenants may have the liability?

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  5. Jon

    A ban – bad idea, the tenant should be responsible for showing he/she/they are an acceptable risk.  Can’t see why the Landlord should pay, after all, the Seller of a house doesn’t pay all the buyers fees and disbursements!!!!

    A cap – good idea.  Too many agents have charged crazy fees.  My Son and his partner recently rented a place, all referencing was done online, the agents did nothing in that regard, the agreement produced was one the agents had bought around 10 years ago (footer showed who had produced it and it was a legal firm) and it hadn’t been amended at all and was woefully out of date and the inventory was p1$$ poor.  Total cost to the two renters – £600.  I asked why they weren’t arguing the fees and was told “all agents in town are charging this amount”.  My estimation is that one person spent around 90 minutes top on the paperwork at a cost of £400 per hour.  Total fees should have been around £100 given that the referencing was done online by the proposed tenants.  Had the agreement been up to date and the inventory done to APIP standards, I would then been happy for the kids to pay around £200 in fees.  After all, the Landlord will be paying too so the agents will still be making some money on the transaction.

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  6. dave_d

    It has been published.

    And can people read it fully before asking questions.. everyone should be reading it from cover to cover anyway. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/656275/Cm_9529_Tenant_Fees_Bill_print.pdf

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  7. Eric Walker

    Good news. Schedule 1 section 1.1

    ’a Payment of rent under a tenancy is a permitted payment’. Phew.

    That said, rent can also be is a prohibited payment – so no first month premiums.

     

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  8. dave_d

    I have a big concern for people who fail references and are dishonest – as the agent by that point has committed to costs. The holding deposit is refunded to the landlord leaving the agent out of pocket.

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  9. BBP

    It’s time to leave the letting Business to the hands of the local authorities.

    It’s even better if we could hire some Russian and Chinese local governments expertise’s.

    Banning letting agency fees will not only destabilise the private sector but also will deter portfolio investors from outside the U.K..

    we have closed down the letting Business entirely who mostly are overseas Landlords. Also advised them to cash it in and invest elsewhere.

    Threre is no prospects in ENGLISH rental  Market.

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