A new bill which could mark the end of letting fees in England has been presented in the House of Commons.
Letting fees are separate from tenancy. The fees are charged by property managers or letting agents who conduct viewing and additional work related to letting property out. Letting fees are not refundable.
Besides bringing an end to the letting fees era, the bill also aims to cap tenant deposits to be equal or less than 6 week’s rent. Tenants stand to be protected from hefty deposits spanning months.
If passed, the bill could see tenants enjoy more than £240 million every year in savings. The Tenant Fees Bill was first mentioned in 2016. The draft was published in November 2017.
Holding deposits will also be capped at a maximum of one week’s rent.
Besides banning letting fees among other fees like referencing and admin costs and restricting the number of deposits tenants are supposed to pay, if passed, the bill will also;
Limit holding deposits to less than a week’s rent, and requirements must specify how the deposits are returned to tenants.
The bill will also cap the amount tenants are charged for a change in tenancy. Cap to £50 unless the landlord proves more costs were incurred.
The bill has also imposed a £5,000 fine for breaching the ban for the first time alongside a criminal offence if the person has been convicted or fined again for the same offence in the past 5 years. A maximum fine of £30,000 can be charged instead of prosecution.
The bill will also prevent landlords from repossessing their property through the Housing Act 1988, Section 21 until all unlawfully charged fees are paid back.
The proposed bill also amends sections of the 2015 Consumer Rights Act. The amendments will require letting agents meet specific transparency requirements in relation to property portals like Zoopla and Rightmove.
The bill will also see Trading Standards enforcing the ban and making provisions for tenants to recover fees charged unlawfully.
Lastly, the bill will also see money collected as penalties kept by local authorities and spent on local housing enforcement in the future.
The new measures will be subject to parliament’s timetables. If passed, the new rules will become law in 2019.
The new bill also specifies that, besides rent and deposits, agents and landlords will only have authority to charge their tenants fees related to; changes in tenancy or early termination requested by a tenant, utilities, communication services, council tax or any payments arising because of a tenant (like the costs associated with repairing damaged keys or replacing lost keys).
While commenting on the new bill, Housing Secretary Hon. James Brokenshire stated that the UK government is committed to building a housing market that is capable of meeting future needs. According to the legislator, tenants in the UK must be protected from unexpected costs which is why the government is delivering its promise to get rid of letting fees as well as put in many other measures for making renting more transparent and fair.
For many years, wages in the UK have failed to match inflation rates. The price of goods/services has been rising faster than wages. The growth in wages has been too slow despite widespread hopes that changes like Brexit would see the UK experience unprecedented growth.
Britain is also facing a debt crisis with recent reports showing that an estimated 300,000 British households are indebted to illegal lenders. There is an increase in illegal loan sharks “preying” on desperate Brits who survive on short term loans to counter the slow growth in wages.
In fact, the UK government has increased IMLT funding to help crackdown rogue high-cost lenders. The new bill is in line with the government’s effort to protect vulnerable citizens who are forced to rely on high-cost credit every month to pay for basic needs like utility bills and rent.
The FCA put a limit on the cost of payday loans in 2015, a move which saw unsustainable payday loan debt decrease by 50%. Consumer groups are pushing for the same cap to be implemented on other high-cost loans like door-to-door loans. As the UK government continues to introduce legislation to protect UK consumers, there is a lot of hope in the future even if wages don’t increase immediately.
Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.