News | Published June 01 2019

Ban on tenant fees effective as of today

The Tenant Fees Act 2019, effective as of today, prohibits landlords and letting agencies from charging tenants for “costs associated with setting up, renewing or ending a tenancy”.

The act covers all assured shorthold tenancies, tenancies of student accommodation and licences to occupy housing in the private rented sector in England.

Costs such as admin expenses, viewing a property, checkout fees, reference as well as credit, insurance and guarantor checks will now be the responsibility of the landlord.

Under this new law, landlords and lettings agencies are under stricter regulations that aim to protect the tenants financially from exorbitant fees.

Landlords who want to bill a tenant for a professional clean, for example, will need to provide good evidence that such service was necessary.

Likewise, renters will only need to provide five weeks' rent to secure a property.

Landlords or agents who ignore any regulation under the act will be charged with a civil offence and face a fine of up to £5,000.

Repeat offenders will be charged with a criminal offence and a fine of up to £30,000.

Views on the effectiveness of this bill are mixed, with the managing director of Kelrick Properties, Richard Lee, arguing: "To maintain profitability in the face of the introduction of this new — and what can only be described as draconian — legislation, we have increased all our property rents by £20 to £25 per month and our management fees by 3 to 4 per cent.

"To date we have had absolutely no resistance to these increases as we have cited the tenant fee ban as being the sole reason for this increase.

"The consequences of such legislation have not been considered; it seems that the Conservative government implemented the legislation against the advice of ARLA to ensure that Labour could not use this in their own manifesto.

"The future is looking uncertain for landlords which can only reduce overall confidence in the sector."

Speaking from London, on the other hand, Azad Ayub Ltd's managing director Azad Ayub commented: "We welcome the ban and believe that the new legislation, in the long-run, will benefit tenants across the capital and the country who, in a large number of cases, have had to bear costs of rising rents and extortionate agency fees."

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The Parliamentary Review

June 01 2019

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