A new government bill, which could bring an end to letting fees across England, has had its first reading in the House of Commons.
Bill also aims to restrict deposits paid by tenants to 6 weeks’ rent
If passed by parliament, the Tenant Fees Bill, which the government says has the potential to save tenants around £240 million per year, also seeks to ensure that the deposit paid by tenants at the start of their tenancy, does not exceed more than 6 weeks’ rent.
First announced in the Autumn Statement in 2016, the draft Tenant Fees Bill was published by the government in November last year.
Holding deposits would also be capped at a maximum of one week’s rent
As well as a restriction on the number of deposit tenants will be required to pay and the ban on letting fees, including the admin costs and referencing fees that some tenants are currently expected to shell out for, the new rules that will come into force if the bill is passed by parliament, also include:
- holding deposits limited to no more than a week’s rent, as well as requirements specifying how this is returned to tenants
- a cap on the amount a tenant can be charged for a change to their tenancy to £50, unless the landlord shows that “greater costs were incurred”
- a fine of £5,000 for the first breach of the ban, with a criminal offence if a person has already been fined or convicted of the same offence during the past 5 years (a fine of a maximum of £30,000 can be given instead of prosecution)
- preventing landlords from taking back possession of their property via section 21 of the Housing Act 1988, until any unlawfully charged fees have been paid back
- amending the Consumer Rights Act 2015, so that letting agent transparency requirements apply to property portals such as Rightmove and Zoopla
- require Trading Standards to enforce the ban and to make provision for tenants to be able to recover fees that they were charged unlawfully.
Money raised by financial penalties will be able to be kept by local authorities and reserved for “future local housing enforcement”.
New measures are “subject to Parliamentary timetables” and will be introduced in law in 2019
The new bill specifies that, other than deposits and rent, landlords and agents will only be allowed to charge tenants fees that are associated with a change or an early termination of a tenancy (that the tenant has requested), communication services, utilities, Council Tax or payments that have arisen because of the tenant, such as the cost of replacing a key that has been lost.
The government expects the new measures to be introduced into law in 2019.
Housing Secretary Rt Hon James Brokenshire MP 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, alongside other measures to make renting fairer and more transparent”.