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When does the ban on letting fees begin?

2-minute read

Josh Hall

8 January 2018

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Changes to tenant fees and deposits have featured prominently in the news for the last year.

Now, landlords and agents are preparing for the introduction of the tenant fees ban. So what does the ban include, and what do landlords need to know?

  • 7 in 10 buy-to-let landlords now using limited companies

What is the tenant letting fees ban?

The government has pledged to introduce new rules making it illegal to charge tenants for things like references or inventories. The Tenant Fees Bill will also introduce limits on how much deposit landlords can take, as well as a series of new fines for breaking the rules.

When does the tenant letting fees ban begin?

The Draft Tenant Fees Bill was introduced to Parliament in November 2017, alongside a six week industry consultation.

After the consultation ended, the government said that it planned to push forward with the Bill. However, it has indicated that the new laws are unlikely to be introduced until after spring 2019.

In the event that the government falls before that date, it seems likely that the Bill will still be pursued. The Labour Party has indicated that it also wants to act on tenant fees and broader tenants’ rights, so it is likely that a Labour government would push ahead with the provisions of the Bill.

What will be banned under the Tenant Fees Bill??

First trailed in 2016, one of the major changes will be the ban on letting agent fees charged to tenants. Under the new regime, tenants will only be able to be charged for rent, deposit, and contractual default penalties. Landlords and agents will be forbidden to charge for things like inventories or referencing.

The letting agent fee ban has been particularly contentious within the letting agent industry, with pressure groups suggesting that it could cost thousands of jobs. Others believe that the ban could push up rents as landlords seek to recoup the costs elsewhere.

However, housing groups have broadly welcomed the change, insisting that tenants were being charged “rip-off rates” for what often constitutes little to no work on the part of the agent or landlord.

Tenant fees ban: the impact on deposits

The other major provision in the Bill is a change to the ways in which deposits are dealt with.

Once the Bill becomes law, tenancy deposits will be legally limited to a total of six weeks’ rent. Holding deposits will not be allowed to exceed one week’s rent.

It’s important to note that landlords and agents will still be required to keep deposits in an approved deposit protection scheme. However, there are some circumstances in which a holding deposit may be kept by the landlord:

  • The tenant withdraws from or does not take “all reasonable steps” to enter into the prospective tenancy
  • The tenant fails checks under the Right To Rent scheme
  • The tenant provides misleading information

What are the penalties for breaking the tenant fees ban?

Finally, the tenant fees ban rules will also introduce a series of new penalties for breaking the rules, and these are stiff. The first offence, which would be treated as a civil offence, would attract a fine of up to £5,000. However, if the offence is repeated within five years then it would either then be treated as a criminal matter, or would attract a civil penalty of up to £30,000.

What do you think about the tenant fees ban? Are you ready? Let us know in the comments.

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We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer

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