The Tenant Fees Bill received Royal Assent yesterday, becoming an Act which will come into force on June 1.
Secretary of State for housing James Brokenshire said that the new Act will “put a stop to unnecessary, costly fees imposed on tenants”, and is expected to save renters at least £240m a year.
The Act will ban fees charged to tenants and cap deposits at five weeks worth of rent.
Brokenshire said: “Tenants across the country should not be stung by unexpected costs from agents or landlords.
“This is part of our ongoing action to make renting fairer and more transparent and make a housing market that works for everyone.”
Brokenshire said that under the Act, agents will only be able to recover reasonably incurred costs from tenants – and this would put a stop to, for example, “tenants being charged hundreds of pounds for a damaged item that actually only costs a few pounds to replace”.
Brokenshire added: “The Act also ensures that tenants who have been charged unfair fees get their money back quickly by reducing the timeframe during which landlords and agents must pay back any fees that they have unlawfully charged.
“Taken together, these provisions help reduce the costs that tenants can face at the outset, renewal and termination of a tenancy.
“The Act is part of a wider package of government reforms aimed at rebalancing the relationship between tenants and landlords to deliver a fairer, better quality and more affordable private rental market.
“We have introduced a range of powers for local authorities to enable them to crack down on the small minority of rogue landlords and agents who let unfit properties.
“This includes fixed financial penalties of up to £30,000 and banning orders – possibly for life – for the most serious offenders.”
ARLA chief executive David Cox said: “We’ve known the tenant fees ban has been coming for a long time, but with only 108 days to go until it comes into force, the industry must start taking time to prepare.
“The Government will soon publish its guidance now that we have legislative certainty, which will give agents a better understanding as to how the ban should practically be implemented.
“We will also be launching a tenant fees toolkit at the ARLA Propertymark Conference on April 2 to help members overcome the legal challenges.”
Comments (17)
This is all just another tax on the landlord and spin to try and win tenant votes, there is nothing “FAIRE” about the tenant fees ban, rents will increase because of the tenants fees ban although the full rent increase may take a year or so to fully kick in. What is fair about the good tenants paying for the bad tenants who cause a cost to be incurred to the landlord because of a default fee? The worst part of this fees ban is the cumulative effect that it is having on a landlords profit, My running costs on a portfolio of 39 properties is 35% of the rent and with recent new regulations of having to join a property redress scheme and the extra fees I will incur due to this tenant fees ban where I can now no longer charge a tenant when they do something wrong it will easily move up to 40% running costs. I am not including mortgage payments or interest in this 40% just running costs. My administration costs will increase due to the property redress scheme because I will have to prepare court like evidence all the way through my tenancy in order to protect myself from the spurious ill-informed complaints from tenants which I also risk being sued from.
They hailed the Deposit Protection Schemes a success and even the landlord organisations have joined in and said it was a success (Purely because they are making money out of it) and yet there can’t be a professional landlord in the country who has not been screwed over by the adjudicators of these deposit protection schemes. Deposits don’t work for landlords because it is just too difficult to comply with the paperwork to prove your case and most usually not worth the work involved!!!
The bottom line is “THE BOTTOM LINE” everyone keeps measuring the property investment yield based on the GROSS return on investment which may in the past have given between 4% and 5% but the reality is we should now be using the NET GROSS return which would give figures of 2.4% and 3% The landscape of cost analysis has changed over the last 5 years due to the Government regulations and quite simply the amount of work that is involved. We are being taxed out of business and this is causing a lack of LONG TERM INVESTMENT in our portfolio’s where the properties are refurbished to modern standards. So we have higher rents and yet lower yields, landlords who will not want to invest in their properties for the future as they cannot see the financial sense in it or simply are just biding their time to sell up.
Well written and reasoned. Perhaps the politicians should take note if they are capable of reasoning as opposed to being lead by the nose by their party leaders
Boo hoo. What right does someone have to own 39 properties when most youngsters are struggling to get on the ladder?
Perhaps you shoud move to a communist country where hard work and initiative is not rewarded. You assume that sucess is handed to people on a plate. I personally worked very long hours and studied hard to achieve my small portfolio working upto 14 hours a day and saving rather than spending so in later life I will be more comfortable. What right do you have to to critise those who have work hard all their lives? At times life is not fair some people die young through illness but that does not mean people who have long lives should be criticised. That is what MAY give someone a right to own 39 houses. By your suggestion what right has Richard Branson to be wealthy? By the way, yes I struggled like hell to get on the housing ladder when I was in my later 20’s.
So now some Whitehall minion with no doubt zero industry experience will be given the task of writing the ‘guidance’ . The Act has 42 pages including the cover, think I will read it myself thank-you very much.
TDS schemes will get a lot busier on disputes as a result of this. I cannot see them forever doing their job with no premium being charged. Another cost for the future.
I’m hoping I can find something to do about LPG tanks! The tank is owned by the gas provider, and they are the only ones who can fill it, so the Tenant HAS to enter a contract with them! The only other way will be for the Tenants to pay to get that tank removed and a new one installed, I can see no other way round it…
Paragraph 1(4)a allows the landlord to make the tenant enter into a contract for utilities.
Paragraph 9 of Schedule 1 allows the tenants to be charged for utilities if it is in the contract.
Vote of no confidence in Parliament … please pray tell what have they got right in the last 12 months. They haven’t a clue and not fit for purpose, yet they are very good at telling others to be fit for purpose!
“Brokenshire said that under the Act, agents will only be able to recover reasonably incurred costs from tenants – and this would put a stop to, for example, “tenants being charged hundreds of pounds for a damaged item that actually only costs a few pounds to replace”.”
Good to see that Brokenshire has confused a deposit deduction (the amount charged is already strictly governed by whichever deposit protection scheme’s guidelines/T’s & C’s) with a fee.
The major frustration is the absolute refusal of the Government to understand the impact on Agents, Landlords and by default, Tenants when the rents have to rise because Landlords, and the agents who look after both them and their Tenants, have to protect their bottom line.
We have worked out and discussed with landlords that we will make a step change on all rents on reletting to new tenants by £30 so the tenant pays £360 extra a year. The landlord will pay the referencing and set up fee of £360 so it is cost neutral to both in the first year. Does cost the tenant more in year 2 etc.
Would you need every agent locally to do the same so that you are not looking expensive on similar houses/flats? You surely run the risk of a longer void period for the client if up against two other flats in the same block £30 cheaper?
Please can everybody work out their average rents on 1st June 2019. Will be interesting to see whether they stay the same or go up or down. I’ll post ours.
Most agents will have been putting increases in place since the idea was first mooted 2 years ago. The rent graph since mid 2017 will be the telling one.
More likely scenario they’ll change the lock without telling you and won’t give you a key. No way this is going to work out well for anyone long term.
Higher rents for tenants, more fees for landlords – therefore less incentive to be a landlord and/or use an agent. Less quality in houses and conditions because if there isn’t enough deposit money to cover jobs and rent owed, some jobs won’t get done.
A success? In my books you cannot predict success, success is measured by results , let’s look back in a year or so and take a reading then. Cardiff City thought that they achieved success by buying a striker, very glad I didn’t place any bets on that move being successful !
Pretty sure you could and should have found a better analogy than this
So from June when a tenant gets locked out they will have to pay for a locksmith to install a new lock and provide a key to the landlord as I won’t be having keys cut and travelling to sort their problem for the sum government might think is reasonable. Brokenshire has more spin than a than a child’s spinning top!