New Legislation: What Landlords Need to Know

Back in May 2018 the ban on tenant fees in England was introduced into Parliament as the Tenant Fees Bill as of February this year the Tenant Fees Act was passed into law, meaning that from 1 June 2019 all new and renewed tenancies will come under the scope of the new ban of fees. All existing tenancies will be brought under the new law from 1 June 2020.

What does this mean for landlords? Here are the key changes which the Act include:

  • Tenancy Deposits must not exceed the equivalent of five weeks’ rent (unless the annual rent exceeds £50,000 in which case deposits are capped at six weeks’ rent).
  • Holding Deposits will be capped at no more than one week’s rent
  • The amount that can be charged for a change to a tenancy will be capped at £50 unless the landlord demonstrates that greater costs were incurred.
  • The Consumer Rights Act 2015 is amended to specify that the letting agent transparency requirements should apply to third-party websites.

As well as changes to rent and deposits, agents and landlords will only be permitted to charge tenants fees associated with:

  • A change or early termination of a tenancy when requested by the tenant.
  • Utilities, communication services and Council Tax.
  • Payments arising from a default by the tenant where they have had to replace keys or a respective security device, or a charge for a late rent payment (not exceeding 3% above the bank of England base rate).

A breach of the fees ban will be a civil offence with a financial penalty of up to £5000. The role of letting agents is to ensure a tenant’s home is safe, legally compliant and professionally managed and the fees cover those costs of ensuring a quality service is provided. There are fears within the industry that the ban on letting agent’s fees could increase rental costs for tenants by approximately £103 per year. Currently fees charged to tenants generate around £700 million per year or approximately 20% of the industry’s turnover.

If you currently have a rental property or are looking to let a property and would like more information or advice about the new legislation please contact one of our branches where our qualified and experience team members will happily help.

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