The British Government has set out its approach to banning letting fees in England in a new draft bill that has been introduced to Parliament.
Communities Secretary Sajid Javid said that it will help millions of renters by bringing an end to costly upfront payments. Letting fees are already banned in Scotland but not yet in Wales.
The draft Tenant Fees Bill will cap holding deposits at no more than one week’s rent and security deposits at no more than six weeks’ rent. The draft bill also sets out the proposed requirements on landlords and agents to return a holding deposit to a tenant.
A new a civil offence will be created with a fine of £5,000 for an initial breach of the ban on letting agent fees and creating a criminal offence where a person has been fined or convicted of the same offence within the last five years. Civil penalties of up to £30,000 can be issued as an alternative to prosecution.
It will require Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees and a lead enforcement authority will be appointed in the lettings sector.
There will be an amendment to the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla.
The draft bill takes into account responses from a public consultation. More than nine out of 10 tenants who responded to the Government consultation backed the action to ban letting agent fees, with seven out of 10 of them saying these fees affected their ability to move into a new rented property.
Overall more than 4,700 responses to the consultation were received from a range of individuals and representative bodies from across the sector. The new measures set out in the draft bill are now subject to Parliamentary scrutiny before they can be introduced into law.
The move has come following evidence that the level of fees charged in England are often not clearly or consistently explained, leaving many tenants unaware of the true costs of renting a property.
The Government hopes that the move will also help to improve transparency, affordability and competition in the private rental market and prevent agents from double charging both tenants and landlords for the same services.
‘This Government is determined to make sure the housing market works for everyone. Tenants should no longer be hit by surprise fees they may struggle to afford and should only be required to pay their rent alongside a refundable deposit,’ said Javid.
‘We’re delivering on our promise to ban letting agent fees, alongside other measures to make renting fairer and increase protection for renters. As part of wider plans to improve the rental market, government has already introduced measures that crack down on the small minority of rogue landlords that shirk their responsibilities,’ he added.
In the forward to the draft bill he also says: ‘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. 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’.
He points out that 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.
‘Nor is it easy for prospective tenants to understand and compare fees, thanks to significant variation in the way agents charge for their services. This kind of opacity is not accepted in other markets, and the lettings sector should be no different,’ he added.
‘Under the new rules, landlords will choose the agent that provides the quality of service that they are seeking at a price that they are willing to pay. 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,’ he concludes.
Earlier this year, the law was changed to allow councils to impose new fines of up to £30,000 as an alternative to prosecution for a range of housing offences.
