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Government moves closer to implementation of the tenant fee ban

2nd May 2018

On Wednesday 2nd May 2018, Government introduced the Tenant Fees Bill to the House of Commons. 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.”

Government maintain that the Bill will 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 the 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
  • Preventing 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

Assessing the draft Bill, the Housing, Communities and Local Government Select Committee found the Bill to have the potential to save tenants in the PRS hundreds of pounds as well as making the market more transparent. Government have considered the Committee’s report and recommendations and have published their responses here: https://www.gov.uk/government/publications/pre-legislative-scrutiny-of-the-draft-tenant-fees-bill-government-response-to-the-select-committee-report

The full Bill and explanatory notes can be found here: https://publications.parliament.uk/pa/bills/cbill/2017-2019/0203/cbill_2017-20190203_en_1.htm   

The full Impact Assessment can be found at: https://publications.parliament.uk/pa/bills/cbill/2017-2019/0203/IA18-001.pdf  

Isobel Thomson, NALS CEO, said:

“Whilst we welcome the move on capping rent deposits at six rather than five weeks and recognising legitimate fees such as for a change of sharer, the most insight into Government’s thinking is to be gained from the Tenant Fees Bill Impact Assessment.

“The Impact Assessment lays bare the premises on which their policy is based, and we do not believe the ban will deliver what the Government aspires to achieve.”

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