There are fears that deposits could soar when agency fee’s are banned.
Before the draft Tenants’ Fees Bill has even gone through Parliament, fears are being raised that it could lead to increased costs for tenants. Whilst the bill will see letting agents’ fees banned, there are concerns that renters could still face increased costs, such as higher deposits, when they move home.
The draft bill will cap tenancy deposits at the equivalent of six weeks’ rent. In the Queen’s Speech, this was going to be set at four weeks, but it has been extended to six. However, there are fears that landlords and agents will charge the maximum amount by law. Although many agents currently take four weeks’ rent as a deposit, the legislation allows them to charge six, and it is feared many will now do so. So whilst tenants will save an average of £350 by not paying agents’ fees, they will be worse off if they have to pay six weeks’ rent as a deposit, rather than four weeks.
Ajay Jagota, from the #ditchthedeposit campaign, argues that many renters could be worse off because of a law which was supposed to make renting more affordable. London Mayor, Sadiq Khan, claims ministers have chickened out of their commitment to reduce up-front costs for tenants. The six-week cap has been welcomed by many people working in the buy-to-let sector, as they feel it recognises concerns raised about the need for greater protection if tenants damage property or default on payments.
If the maximum amount of six weeks is applied, then it will mean the average tenancy deposit would be £1,391 nationally, but £1,595 in the South East and an incredible £2,390 in London. Furthermore, a deposit cap of six weeks could see the amount of cash lost to the British economy rise from £4.1 billion to £5.9 billion.
The bill is expected to make the process of renting a lot more transparent and consumer-friendly. There cannot be any hidden extra costs, such as agents’ fees and it will be written in law what costs can and cannot be claimed from tenants.
Most landlords will agree that transparency is a positive factor, as it prevents any possible disputes or disagreements through misunderstandings. Landlords who put everything in writing and keep records of all conversations and dealings with their tenants also have greater redress if there is a dispute with tenants over areas of responsibility, costs or property.
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