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Lettings Fee Ban: Impact On Landlords?

  17 May 2018

On the 2nd of May, the Government published their Tenant Fees Bill, which aims to ban all agents  feesand letting fees charged by landlords and agents in England. This was initially intimated in the Autumn Statement of 2016 and the Government undertook consultations in the intervening period.

It was initially proposed that a four-week deposit cap would be imposed on the industry but after consultation, this cap has been set at a level of no more than six weeks’ worth of rent.

Some of the key components of the Tenant Fees Bill include:

  • Letting agents or landlords being banned from charging fees for the continuation, renewal or granting of a tenancy
  • Holding deposits to be capped at a maximum of one weeks rent
  • Security deposits to be capped at a maximum of six weeks rent

The bill also aims to create a civil offence, which comes with a fine of £5,000 for an initial breach and then a criminal offence where an individual has been convicted or fined for the same offence within a five-year period. As an alternative to prosecution, civil penalties of up to £30,000 can be issued.

Trading Standards have a role to play with the new bill

Trading Standards will be required to enforce the ban and to allow provision for tenants to recover fees that were charged unlawfully. The bill also provides the provision for a lead enforcement authority to be appointed for the letting sector.

A major change for the sector comes with landlords only being allowed to charge fees for rent, deposits and the following matters:

  • Where an early termination or change of tenancy has been requested by the tenant
  • Council Tax, communication services and utilities
  • Where a tenant has defaulted or incurred a cost, such as losing a key

The bill is subject to the timetables of Parliament and it should be introduced into law in 2019.

The bill has been welcomed by many parties, with the Housing Secretary, James Brokenshire MP saying; “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.”

From the point of view of tenants, anything which reduces the level of money that they must spend is likely to be viewed as a positive factor. Undertaking a quick search of online news stories for reaction suggests that “fairness” is used a lot to describe the bill, certainly for tenants.

However, it would be fair to say that not everyone is supportive of the lettings fee ban. On the Property Industry Eye site, Ian Wilson, from the Property Franchise Group which includes companies like Martin & Co, claims that the lettings fee ban could see his company lose revenue of £10m.

Ian Wilson also attempted to stick up for small to medium sized letting agents, who he claims operate on profit margins that are less than 30%. He claims that the removal of 10 to 15% of revenue from these firms could mean that these companies experience a fall in profits of around one third to one half.

It is vital that landlords understand the implications of this bill and that they are fully prepared for its implementation next year. Any landlord requiring assistance when it comes to the Lettings Fee ban or any other matter should contact Jezzards in confidence on 03330 433 633 and we will be happy to assist you.


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