NEW legislation intended to protect private renters from unfair lettings fees, and cap the deposits they pay, has passed into law.
The Tenant Fees Bill gained Royal Assent yesterday, with the ban on fees to come into effect from 1 June, and deposits limited to no more than five weeks’ rent.
“Tenants across the country should not be stung by unexpected costs from agents or landlords,” said communities secretary, James Brokenshire MP.
“This Act not only delivers on our promise to ban letting fees but also caps deposits at five weeks’ rent and sets out how and when landlords can charge tenants fees – helping renters keep more of their hard-earned cash.
“This is part of our ongoing action to make renting fairer and more transparent and make a housing market that works for everyone.”
Under the Act, landlords and agents are only able to recover “reasonably incurred costs” from tenants and must provide evidence of these costs before they can impose any charges.
According to the Ministry of Housing, Communities & Local Government (MHCLG), this is supposed to put a stop to tenants being charged hundreds of pounds for a damaged item, for example, that actually only costs a few pounds to replace – such as £60 to replace smoke alarms.
Furthermore, the Act also ensures that tenants who have been charged unfair fees get their money back quickly by reducing the timeframe during which landlords and agents must pay back any fees that they have unlawfully charged.
Measure introduced by the new Act include:
- Capping security deposits at no more than five weeks’ rent and holding deposits at no more than one week’s rent. It also sets out the proposed requirements on landlords and agents for returning a holding deposit to a tenant
- Capping the amount that can be charged for a change to a 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 five 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 online property portals such as Rightmove and Zoopla
- Enabling local authorities to retain the money raised through financial penalties with this money reserved for future local housing enforcement