The proposed ban on letting fees is one step closer to becoming law, with the Tenants Fees Bill introduced to Parliament today (2 May).
The bill was been introduced by the new secretary of state for housing, communities and local government, James Brokenshire, who estimated that this ban will save tenants around £240m a year.
The Tenants Fees Bill will restrict the fees that letting agents can charge. Landlords and agents can still charge a deposit, but this cannot exceed six weeks’ rent.
In addition, ‘holding deposits’ will be capped at just one week’s rent. The bill sets out requirements for landlords and agents to return these payment to tenant.
Landlords will also only be able to charge a maximum of £50 to change the terms of a tenancy agreement, unless that can demonstrate that the cost of this incurs greater costs.
This Tenant Fees Bill also proposes tough new penalties to ensure that landlords and agents abide by these new rules. Those that don’t face fines of up to £5,000 and criminal charges for a second offence within five years.
It is now more than two years since this ban was first proposed. This bill still has to get through the normal parliamentary procedures, and it is not expected to become law until next year.
It is now two years since this ban was first proposed, by chancellor Philip Hammond in the 2016 Autumn Statement. At the time he said: “We will ban fees to tenants as soon as possible”.
These proposed new rules will only apply in England. Letting fees have already been banned in Scotland.
However there has been criticism that this ban will not reduce tenants costs, and may mean letting agents pass on these costs to landlords
Arla Propertymark chief executive David Cox says: “The Tenant Fees Bill begins now begins its passage through Parliament. We do not believe the bill will achieve its aims of delivering a more affordable private rented sector.” He says Arla’s own research last year suggested tenants could end up worse off, as a result of this ban.
However he says he was leased to see that the government has capped security deposits at six weeks, rather at five-weeks’ rent, which was earlier proposed by the housing, communities and local government committee.
He adds: “Now we have greater clarity as to what this ban will entail agents must start preparing for when it comes into force.”
Commenting on this new bill Brokenshire says: “Tenants across the country should not be stung by unexpected costs. That’s why we’re delivering on our promise to ban letting fees, alongside other measure to make renting fairer and more transparent.”
Article originally posted by Mortgage Strategy