The long-awaited Tenant Fees Bill 2017-2019 has been introduced to the House of Commons, and received its first reading.
What’s the aim?
The aim of the Bill is to reduce the costs that tenants face at the outset and to enable them to see what a property will cost in the advertised rent, without any hidden costs. The party that contracts the service i.e. the landlord will be responsible for paying for the service.
The Bill places restrictions on landlords and letting agents charging their tenants with certain payments (commonly called letting fees). The restrictions will also benefit people acting on behalf of tenants or who are guaranteeing tenants' obligations.
What you landlords/agents can do
Payments such as the rent and security deposit are still allowed under the Bill. Holding deposits will still be permitted, however they are allowed only if they are refundable and the amount does not exceed one week's rent. Fees relating to assigning or varying a tenancy are still allowed, but in effect they must be reasonable.
What landlords/agents can’t do
The Bill prevents landlords and their agents from requiring tenants (and other relevant persons) to take services from third parties or to make a loan.
Implications of a breach
A breach of rules will usually be a civil offence that carries a financial penalty of £5,000. However, if a breach is committed within 5 years of the imposition of a financial penalty or conviction for a previous breach, the new breach will be a criminal offence. The penalty for the criminal offence, which will be a banning order offence under the Housing and Planning Act 2016, is an unlimited fine. Take note that the local authority may choose to impose a financial penalty of up to £30,000 as an alternative to prosecution.
A breach of the provisions requiring the return of holding deposits will be a civil offence, and subject to a financial penalty of £5,000.
Enforcement
It’s mainly trading standards that will enforce the provisions.
The Bill also extends the provisions of the Consumer Rights Act 2015 about information to be provided by letting agents to online property portals.
The responsibility for enforcing mandatory client money protection scheme membership under the Housing and Planning Act 2016 will move to trading standards authorities.