The Tenants’ Fees Bill received its formal Royal Assent yesterday afternoon – and immediately the government issued a press release confirming the following:
- Tenant Fees Act puts a stop to unnecessary, costly fees imposed on tenants by landlords or letting agents
- New Act bans unfair letting fees and caps tenancy deposits at 5 weeks’ rent, with ban on fees to take effect from 1 June 2019
- Measures expected to save renters at least £240 million a year – or up to £70 per household
Communities Secretary James Brokenshire MP says:
“Tenants across the country should not be stung by unexpected costs from agents or landlords.”
“This Act not only delivers on our promise to ban letting fees but also caps deposits at 5 weeks’ rent and sets out how and when landlords can charge tenants fees – helping renters keep more of their hard-earned cash.”
“This is part of our ongoing action to make renting fairer and more transparent and make a housing market that works for everyone.”
“Under the Act, landlords and agents are only able to recover reasonably incurred costs from tenants and must provide evidence of these costs before they can impose any charges.”
In summary, the new Tenant Fee Act is:
- capping security deposits at no more than 5 weeks’ rent and holding deposits at no more than 1 week’s rent. It also sets out the proposed requirements on landlords and agents for returning a holding deposit to a tenant;
- capping the amount that can be charged for a change to a tenancy at £50 unless the landlord demonstrates that greater costs were incurred;
- creating a financial penalty with a fine of £5,000 for an initial breach of the ban with a criminal offence where a person has been fined or convicted of the same offence within the last five years. Financial penalties of up to £30,000 can be issued as an alternative to prosecution;
- requiring Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees via the First-tier Tribunal;
- preventing landlords from recovering possession of their property via the section 21 Housing Act 1988 procedure until they have repaid any unlawfully charged fees;
- enabling the appointment of a lead enforcement authority in the lettings sector;
- amending the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to online property portals such as Rightmove and Zoopla;
- enabling local authorities to retain the money raised through financial penalties with this money reserved for future local housing enforcement.
You can see all the official documentation relating to the Act here.
WIDER GOVERNMENT REFORMS
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.
Local authorities have been empowered 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.
Government Ministers have also extended mandatory licensing for Houses in Multiple Occupation to improve living conditions of tenants in shared homes and tightened up rules on smoke and carbon monoxide detectors. Private tenants can also apply for a refund of up to 12 months’ rent if their landlord does not deal with health and safety hazards in their home.
Other government steps to reform and improve renting include:
- a national database of rogue landlords and agents to keep track of those that have been banned from letting
- a comprehensive review of the rating system used by local authorities to assess the presence of serious risks to the health and safety of tenants
- mandatory client money protection – by which rental money held by letting agents is safeguarded against theft and fraud – for all agents
- a mandatory redress scheme for landlords
- an independent regulator to oversee letting agents, setting standards and maintaining minimum qualifications
- new, mandatory 5-yearly electrical installation safety inspections
- considering the case for a specialist housing court to provide greater access to justice for landlords and tenants in property disputes
These measures are all part of ongoing government action to protect tenants and drive up standards in the private rented sector – helping make a housing market that is fairer and works for everyone.
If you would like to discuss ways of getting your lettings business ready for this piece of major legislation, please contact us here.