The Government have just published a draft paper outlining the ban on letting fees – this will apply to landlords and letting agents. Many agents were expecting a cap on fees rather than an outright ban, but it seems the government have decided a total ban is the right approach.
The ban will mean that no admin or referencing fees can be charged to the tenant. The tenant will only be obliged to pay a refundable deposit and his/her rent. This bill will make it a civil offence to charge such fees, with a fine of up to £5,000 if the ruling is breached.
In brief the draft document (Tenant Fees Act 2017) states:
- Deposits will be capped at maximum of 6 weeks rent
- Holding deposit or reservation fees will be capped at 1 weeks rent
- No other fees can be charged of the tenant
- There is a proposal to appoint an enforcement authority
- There is a consultation regarding introducing a mandatory membership of a client money protection scheme for any agent handling client funds
- A breach of the rules will result in a fine of up to £5,000
The Secretary of State Sajid Javid stated that he wishes to see the new bill “deliver a fairer, more competitive, and more affordable lettings market”. Mr. Javid mentioned that given the state of affairs in the housing market many people are forced to rent for long periods of time and deserve to be treated fairly and not ripped off.
Letting agents and landlords will be a little concerned for the introduction of this ruling. It is likely that any additional costs, which are not passed onto the tenants, will be passed from the letting agents to their landlord and by the landlords back to the tenants in a roundabout way. The chances are this ruling will just push rent higher still.