A new draft bill was introduced to Parliament on 1st November 2017 to ban letting fee’s. This proposed bill has had mixed reviews with some tenants rejoicing over the ban and other concerned as to what this will mean in the future for the cost of their rent.
MP’s have responded to the draft bill with David Cox, chief executive of ARLA Propertymark, warning that the ban would result in a loss of income for agents and subsequently lost jobs, and demanded more clarity on the issue of whether or not agents could charge tenants default fees.
In an overview:
the bill introduces a ban on all upfront fees. Landlords and letting agents would be banned from charging any fees other than:
– the rent
– a refundable security deposit
– a refundable holding deposit
– ‘default fees’ if a tenant breaches a clause in their tenancy agreement (e.g. losing a key or missing a rent payment)
This would mean that tenants can no longer be charged fees for setting up or renewing a tenancy – including fees such as referencing fees, credit check fees and administration fees.
The bill also introduces a cap on deposits. Landlords and letting agents will only be allowed to charge a maximum of six weeks’ rent for security deposits, and one week’s rent for holding deposits. The bill also sets out guidance on when landlords and letting agents should return holding deposits to tenants.
Local authorities will be responsible for ensuring landlords and letting agents comply with the legislation. There will be a civil offence with a fine of £5,000 for an initial breach of the ban on letting agent fees and creating a criminal offence where a person has been fined or convicted of the same offence within the last 5 years. Civil penalties of up to £30,000 can be issued as an alternative to prosecution.