Tenant Fees Act comes into force
This weekend (1 June 2019) saw the introduction of the Tenant Fees Act. It means most letting fees are now banned within the private rented sector in England.
It also caps deposits paid by tenants.
The Tenant Fees Act applies to new or renewed tenancy agreements signed on or after 1 June 2019.
According to the government, the aim of the Act is to reduce the costs that tenants can face at the beginning of – and during – a tenancy. It said tenants will be able to see what a given property will cost by looking at the advertised rent, with no hidden costs.
It added that the landlord will now be responsible for paying for an agent’s service, which will help to ensure the fees “reflect the real economic value of the services provided and sharpen letting agents’ incentive to compete for landlords’ business”.
Permitted fees
From now, the only payments that landlords or letting agents can charge tenants for new contracts are:
- rent
- a refundable tenancy deposit capped at no more than five weeks’ rent where the total annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or more
- a refundable holding deposit – used to take a property off the market – which will be capped at no more than one week’s rent
- payments associated with early termination of the tenancy, when requested by the tenant
- payments for utilities, communication services, TV licence and council tax
- default fees for late payment of rent and replacement of a lost key/security device giving access to the housing, when required under a tenancy agreement
Tenant Fees Act response
The ban on tenant fees was received positively by a number of organisations.
Gillian Guy, chief executive of Citizens Advice, said: “The end of these uncompetitive and unfair letting fees is a real win for renters. The new law means families and other renters don’t have to hand over hundreds of pounds every time they move home.
“We look forward to working with the government to further strengthen the hand of renters in a market where they have little bargaining power.”
However, not everyone has welcomed the news.
Chief executive of ARLA Propertymark David Cox told BBC Radio 4 that these costs still have to be recovered so although “this policy may sound great, really, all that is going to happen is the agents will have to pass the costs on to landlords, who will pass them on to tenants and we’re already seeing that”.
He explained that letting agents’ fees can no longer be passed onto the tenant, so they will end up being passed onto the landlord instead. At this point, the fees will then be passed back to the tenant.
Tenant fees were banned in Scotland in 2012, while agents are still legally able to charge tenants their fees in Northern Ireland.
In Wales, tenant fees will soon be outlawed. The Renting Homes (Fees etc.) (Wales) Bill has been approved by the National Assembly for Wales and is awaiting Royal Assent.
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