Tenant fee ban in England will save renters £240 million a year

The new Tenant Fees Act will save renters across England £240 million a year as tenancy deposits are capped and landlords and agents are banned from charging unnecessary fees, it is suggested.

According to the Ministry of Housing, Communities and Local Government (MHCLG) tenants will be protected from unfair letting fees with most seeing tenancy deposits capped at five weeks’ rent.

The ban on fees, which already exists in Scotland, was brought in as it was felt that unexpected fees and high deposits can make properties harder for people to afford and are often not clearly explained upfront, leaving many prospective tenants unaware of the true costs of renting a property.

The Tenant Fees Act now puts an end to these unnecessary fees imposed by landlords and agents. It is expected to save tenants across England at least £240 million a year, or up to £70 per household.

The Act also caps the tenancy deposits that renters pay at the start of their tenancy at the equivalent of five weeks’ rent. This gives people the assurance that, legally, they cannot be expected to pay more than this, where the total annual rent is less than £50,000, to secure a property.

‘Tenants will no longer be stung by unreasonable costs from agents or landlords, thanks to the implementation of the Tenant Fees Act. This Act bans unnecessary letting fees and caps the majority of deposits at 5 weeks’ rent, helping renters keep more of their hard-earned cash,’ said Secretary of State for Housing, James Brokenshire.

‘Alongside our recent announcement to scrap no fault evictions in the sector, this will make renting fairer and more transparent, creating a housing market that works for everyone,’ he pointed out.

‘This Act also puts a stop to tenants being charged hundreds of pounds for admin or renewal fees. In addition, under the Act’s default fee provision, landlords and agents are only able to recover reasonably incurred costs from tenants for lost keys or other security devices and must provide evidence of these costs before they can impose any charges. They may also charge a default fee in relation to late rent,’ he explained.

He also pointed out that the Act ensures that tenants who have been charged unfair fees can get their money back. Trading Standards or the First-tier Tribunal can require landlords and agents to pay back any prohibited payment or any unlawfully retained holding deposit within seven to 14 days.

‘Taken together, these provisions help reduce the costs that tenants can face at the outset of, during, the renewal of and termination of a tenancy,’ Brokenshire added.

According to Gillian Guy, chief executive of Citizens Advice, the end of uncompetitive and unfair letting fees is a real win for renters. ‘The new law means families and other renters don’t have to hand over hundreds of pounds every time they move home. We look forward to working with the Government to further strengthen the hand of renters in a market where they have little bargaining power,’ she added.

David Cox, chief executive of the Association of Residential Letting Agents (ARLA), said that agents should already have implemented the correct changes within their business in order to be compliant with the law. ARLA has produced a Tenant Fees Toolkit for relevant advice, information, and legal documents for its member.

‘Although the Tenant Fees Act has been front of mind for a while, it’s important members stay up to date with other laws and local licences that are being introduced, as a breach of the ban can result in a large fine, so it’s vital agents get this right,’ he added.