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Draft Tenant Fees Bill is published

Landlords and agents will only be able to charge three types of fee, draft legislation reveals, and also requires agents to join a client protection scheme.

Nigel Lewis

The government has this morning introduced its draft Tenant Fees Bill in parliament, which reveals the full details of its plans to make the charging of fees to tenants an offence, and to make it compulsory for agents to be a member of a client money protection scheme.

The announcement comes after nearly seven months of waiting for agents during which a three-month industry consultation has been completed, and the draft bill will be the government’s initial framing of the bill following that.

“The ban will make renting fairer and easier for tenants by allowing them to see upfront what a given property will cost them – the rent that is advertised will be what you are expected to pay, nothing more,” says Sajid Javid, Secretary of State for Communities and Local Government (pictured, left).

“It will also sharpen and increase letting agents’ incentives to compete for landlords’ business, resulting in a better and more transparent service for everyone.”

The bill applies to both landlords and their agents and bans all fees or prohibited payments as a condition of arranging the grant, renewal or continuance of a tenancy in England.

It puts payment by tenants to landlords or agents into two categories – permitted and prohibited payments. The former includes a tenancy deposits, which cannot exceed six weeks’ rent, a holding deposit which cannot exceed one weeks’ rent and rental default payments.

“The NLA is happy that the Government has listened to the evidence we presented on behalf of our members. Whilst we remain disappointed that the Government continues to believe a cap is necessary, extending it to 6 weeks rent will reduce those households and landlords disadvantaged by the policy significantly,” says Chris Norris, Head of Policy at the National Landlords Association (NLA) (pictured, right).

Fines up to £30k

All other payments by tenants including referencing, checkout, inventory, contract renewal, application, guarantor and pet deposit fees will be deemed prohibited payments and, if an agent or landlord is caught trying to charge them, a fine of between £5,000 and £30,000 is to be levied.

“Whether you’ve been forced into life as a tenant or simply decided that it’s the best option for you, you deserve to know that you will be treated fairly and not ripped off by the people you rely on for finding and renting your home,” says Sajid Javid.

“Yet in too many cases that’s not happening, and that’s because the lettings market is simply not designed in the interests of the people it is supposed to serve.

“Tenants rely on agents to find properties, yet they are selected and appointed by landlords.

“That disparity can lead to tenants paying hundreds of pounds in fees that are far from transparent, substantially raising the costs involved in renting, and causing nasty surprises for new tenants who think they’ve found a home that suits their needs and budget.

Other features of the bill include making tenancies which feature prohibited payments null and void, and that local weights and measures authorities will be responsible for policing the new legislation, when it is passed, with powers to force agents and landlords to return prohibited payments to tenants.

Larger lettings agencies will also be able to prosecuted as well as individual letting agents, and the draft bill also reveals that the Consumer Rights Act 2015 will be amended to reflect the new and limited fees structure.

David Cox, ARLA, image

Commenting on the requirements for agents to join a compulsory client money protection scheme, ARLA Propertymark Chief Executive David Cox (pictured, left) said: “While Propertymark members are already required to have CMP, this new measure will ensure that all letting agents are operating on a level playing field, meaning consumers will be protected regardless of the agent they choose.

“We are equally pleased that agents will have to display their CMP membership prominently, which will provide tenants peace of mind that their money is protected.”

Read the full Draft Tenant Fees Bill. 

 

November 1, 2017

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