ARLA Propertymark says it has found a significant legislative gap in the Tenant Fees Act that, if agents are not careful, could see them fined for breaching the regulations without realising it.
The act limits holding deposits to the value of a week’s rent and stipulates that unless tenants pull out after making an offer for a property without good reason, they must be refunded to the tenant.
To enforce this, the act prohibits any payment to be made prior to the signing of a tenancy agreement.
This, says ARLA, means agents can no longer require tenants to pay their tenancy deposit and rent before signing their contract, as is often the case, as this would then break the law.
“It’s all about the way the Tenant Fees Act is drafted,” says David Cox, Chief Executive of ARLA Propertymark (left).
“It means that anything you take before an agreement, any money taken in advance, is treated as a holding deposit.
“In the past some agents would wait for the funds to clear but that won’t be possible now.”
Cox also says that, despite it only being a few weeks after the ban was introduced, many agents are now putting up their management fees for landlords, as was predicted, and that he expects ARLA’s latest letting index to show rising rents as a result.
Tenant fees ban
Paul Shamplina (left) of Landlord Action agrees, saying he’s had landlords email him about higher management fees, but goes further.
He predicts that more agents will also ask for their management fees upfront rather than charging monthly, in order to help their cashflow.
“I think many agents will also begin to charge landlords renewal fees and also charge admin fees for additional services, rather than including in these in their overall management agreement.”
Read more about the tenant fees ban.