The government announced at the 2016 Autumn Statement that it would consult on introducing a ban on letting agent fees paid by tenants, to improve competition in the private rental market and give renters greater clarity and control over what they will pay.
On Wednesday 23 January 2019, almost three years later, the government approved the Tenant Fees bill, which bans all upfront fees to tenants – things like reference fees, credit checks, administration fees and contract renewal fees. Government analysis suggests private renters could save an average of £300 every time they move house.
The bill only allows landlords and letting agents to charge default fees for two things:
- Replacing a lost key, limited to the landlord’s or letting agent’s reasonable costs, which must be evidenced in writing; and
- Late rent (only applied after the rent is 14 days late) plus interest which is limited to 3% above the Bank of England base rate.
Landlords can still recover money for damage caused to the property (beyond general wear and tear) as they did prior to approval of the bill e.g. by deducting money from the deposit at the end of the tenancy.
The bill also caps the amount which can be requested for security deposits, reducing them from six weeks’ rent to five weeks.
The cap will help address some of the challenges of affordability; reducing the barrier for tenants to rent a property.
The only exception to this will be for particularly high-end properties (where the annual rent is over £50,000 per year), where the cap will remain at six weeks’ rent.
The bill introduces additional protections around holding deposits when a tenancy isn’t going ahead. Firstly, the holding deposit is capped at no more than one week’s rent. The bill also stipulates that only one holding deposit can be taken per property.
If you decide not to go ahead with a tenancy, and the landlord or letting agent wishes to retain the holding deposit, they are also now required to set out in writing the reasons why within seven days of your decision, or they will have to refund the holding deposit.
Fees that are now banned:
- Credit checks
- Administration fees
- Contract renewal fees
What if a letting agent or landlord is still charging me fees? If a letting agent tries to charge you a fee after 1 June 2019, which isn’t the cost of replacing a key, or for late rent, they will be breaking the law. Contact Setfords Solicitors to find out how we can help you recover unlawful fees.
If you wanted to speak about anything relating to this article please don’t hesitate to contact Tessie Belton.