The long anticipated Tenant Fees Bill has almost completed its passage through Parliament. This important legislation will have a significant impact on the lettings market, including student accommodation. The aim of the Bill is to deliver ‘a fairer more competitive and more affordable lettings market where tenants have greater clarity over what they pay’. In essence this will mean a tenant fee ban.
The word ‘ban’ is often used in an emotive and headline grabbing way, but in this instance it accurately describes the potential outcomes.
What will be in the Bill?
As the Bill reaches its final stages the key points that lettings agents, tenants and landlords need to be aware of are:
- It applies to landlords and agents
- Virtually all fees are banned, including:
- Charging for a guarantor form
- Carrying out credit checks
- Preparing inventories
- Cleaning services
- Professional cleaning
- Admin charges
– Requirements to have specific insurance providers
- The only fees that will be allowed are: limited late payment fees, cancellation fees, loss of keys or similar (key fob) and change of sharer
- Late payment fees will now be limited to 3% above Bank of England base rate BUT if the tenant pays within 14 days of the due date no fee will be charged. Charges for letters, solicitor letters or letters to guarantors will also cease
- The Act is not retrospective, in other words, current practices apply until the Bill comes in on the proposed date of June 1st After that date, fees can be charged on those tenancies that have been drawn up and are due to start or those that are in operation, but this will end on May 2020 or when the tenancy renews
- The penalties for breaching the ban are tough. The legislation will be enforced with fines of up to £5,000 for a first offence. Any subsequent breaches will be criminal offences or could incur a fine of up to £30,000, as a civil penalty, and be subject to a banning order
Good news for tenants
This all sounds like good news for tenants. They will have a clearer understanding of what they will pay and will be paying less overall. The outcomes are not good for everyone though. The main losers will be letting agents who will see substantial reductions in their fees and overall income. This will have an impact on their operational effectiveness, and in some cases, their very existence.
How will it affect Sulets?
At Sulets we will be ensuring that all of our practices are in line with the new legislation (the penalties for non-compliance and any subsequent breaches are eye watering), but the overall impact on us will be negligible. This is because we do not charge fees for items such as inventories, references and exit fees. That means that we will be offering the same excellent value and will have no drop in service standards to both our tenants and landlords.
February 2019 Update
The Bill has now become law after receiving Royal Assent on February 12th and will come in force on June 1st 2019.