James Brokenshire MP, the Communities Secretary, has stated that a new law, which will protect tenants against unjust letting fees, will come into force from 1st June 2019. The law placing a cap on tenancy deposits at five weeks’ worth of rent, will apply to all residential tenancies within England and aims to stop the costly and unnecessary fees imposed by letting agents or landlords on tenants.
The law is estimated to save the population of tenants in England around £240 million each year, which equates to approximately £70 for each tenanted household. This will result in a loss of revenue, especially for letting agents, and will impact their businesses as they attempt to offset the losses by increasing current charges billed to landlords. However, costs which cannot be covered by landlords and agents are likely, according to industry experts, to result in increased rents.
By protecting tenants, Mr Brokenshaw hopes that the measures will put tenants’ money back into their own pockets.
The aim behind the scheme is to provide transparency and certainty, where tenants will not be discouraged from renting due to high fees. High deposits and unexpected letting fees can make homes harder for tenants to afford, while they are also not often explained clearly upfront. This leaves many potential tenants oblivious to the true price of renting a home.
due to high fees. High deposits and unexpected letting fees can make homes harder for tenants to afford, while they are also not often explained clearly upfront. This leaves many potential tenants oblivious to the true price of renting a home.
Receiving Royal Assent in February 2019, the Tenant Fees Bill will now become an Act of Parliament. Tenants across England will no longer face unexpected costs from landlords or agents, James Brokenshire announced.
The Act will deliver on the Government’s promise to prohibit letting fees, but also imposes a maximum deposit of five weeks’ worth of rent, and sets out when and how landlords can charge fees to tenants. Holding deposits are also capped at a maximum of one week’s rent, with proposed requirements for agents and landlords to return this deposit to the tenant. The measures form part of the Government’s ongoing strategy to make renting more transparent and fair, and to ensure the housing market works for all.
Under the new legislation, agents and landlords will only be able to recover incurred fees from tenants which are reasonably charged. Evidence must also be provided of any bills before these charges can be imposed.
This will effectively end tenants being charged fees of hundreds of pounds for damaged items which cost far less to replace. For example, £60 for the replacement of a smoke alarm. There will also be a cap of £50 that can be charged in the event of a change to the tenancy.
The Act will also ensure that tenants who are charged unjust fees also get their money returned to them quickly, by shortening the time frame for agents and landlords to pay back the fees which they have charged unlawfully. In combination, these provisions will help lower the costs imposed on tenants from the outset, termination and renewal of a tenancy.
The Government has also introduced a variety of powers for councils, which will enable local authorities to tackle the small number of rogue agents and landlords who let properties which are unfit. This will include fixed penalties of a maximum £30,000, as well as banning orders of up to life for serious offenders.
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