Yesterday afternoon, the Tenant Fees Bill was introduced into Parliament by the new Secretary of State for Housing, Communities and Local Government, James Brokenshire.
Brokenshire published the Tenant Fees Bill yesterday, following the release of a draft bill in November last year, saying that the ban will save tenants a total of £240m per year.
The bill will also seek to cap tenancy deposits at the equivalent of six weeks’ rent. It is expected to become law next year.
In a separate impact statement, also published yesterday, the Government stated that 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 Tenant Fees Bill has been Introduced into Parliament
The statement went 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 was created from feedback from a recent public consultation, include:
- Capping holding deposits at no more than one week’s rent – the bill also sets out the proposed requirement on landlords and letting agents to return a holding deposit to a tenant.
- Capping the amount that can be charged for a change of tenancy at £50, unless the landlord demonstrates that greater costs were incurred.
- Creating a financial penalty of £5,000 for an initial breach of the ban, with a criminal offence where an individual has been fined or convicted of the same offence within the last five 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 the provision for tenants to be able to recover unlawfully charged fees via the First-tier Tribunal.
- Preventing landlords from recovering possession of their property through the section 21 notice 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, letting 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 a lost key.
The new measures are subject to Parliamentary timetables.
David Cox, the Chief Executive of ARLA Propertymark (the Association of Residential Letting Agents), comments on the announcement: “The day we have been expecting since the Chancellor announced the ban on tenant fees in the Autumn Statement 2016 has arrived, with the Tenant Fees Bill beginning its passage through Parliament this afternoon.
“We do not believe the bill will achieve its aims, as our own research last year demonstrated that tenants will end up worse off and banning fees will not result in a more affordable private rented sector.”
He continues: “ARLA Propertymark has worked hard over the last 18 months to explain the unintended consequences of the ban to Government, and we’re pleased they have listened and allowed Change of Sharer, Surrender of Tenancy, holding deposits, exempted the Green Deal Charge, and capped security deposits at six weeks, rather than the Committee’s proposed five-week cap. Now that we have greater clarity on what the ban will entail, agents must start preparing for when it comes into force.”