The Tenant Fees Bill was introduced into Parliament on 2nd May, and has since had its second reading. For those who are unaware, this new bill proposes to put a cap on tenancy deposits to six weeks’ rent, along with a ban on letting agents charging fees to tenants.
Following these movements, Government has warned of an estimated £240m loss a year for the landlords and letting agents of England and Wales in administration fees due to this ban.
Scottish property management company DJ Alexander is warning that landlords and letting agents should not ignore these changes and the potential oncoming financial changes.
David Alexander, managing director of DJ Alexander, has commented: “This bill has been introduced to regulate what was a largely unregulated and potentially problematic area of letting.
“Some landlords and agents have been charging substantial fees to tenants with little explanation why these charges applied other than for ‘administration’.
“This has been an area of complaint for tenants who believe that unscrupulous landlords and agencies were using these fees as a means of increasing their income rather than improving service for the tenants.
“The loss of these fees may prove problematic for some but should be looked upon as an opportunity to ensure that tenants have a transparent, honest, and understandable agreement with their landlord or agent.
“Landlords and agents cannot ignore this change which is inevitably coming so must put in place appropriate measures to deal with any loss of income and ensure their business is operating in a legally appropriate way.
“Similar changes were implemented in Scotland in 2012 which ended agency fees and cleared up deposit holding by landlords and agents and generally most have coped well with this.
“The bulk of the fee loss is likely to be absorbed by landlords, but they will be creating a more trusting and attractive environment for their tenants which generally results in greater demand and consequently increased rental returns.
“Setting the highest standards for letting is something that everyone in the sector should aspire to and achieve.”
The Tenant Fees Ban is expected to become law next year.