A new draft bill will be introduced to Parliament today (1
November 2017) to ban letting fees.
The draft Tenant Fees
Bill will set out the government’s approach to banning
letting fees for tenants, helping millions of renters by bringing
an end to costly upfront payments.
Evidence shows the level of fees charged are often not clearly or
consistently explained, leaving many tenants unaware of the true
costs of renting a property.
This latest action will help improve transparency, affordability
and competition in the private rental market. It will also
prevent agents from double charging both tenants and landlords
for the same services.
Today the government has also launched a consultation on
making membership of client money protection schemes mandatory
for letting and managing agents that handle client money.
These schemes ensure greater financial protection for landlords
and tenants, giving them complete confidence that their money is
safe when it is with their agent and they can be compensated if
all or part of their money is not repaid.
Communities Secretary said:
This government is determined to make sure the housing market
works for everyone. Tenants should no longer be hit by surprise
fees they may struggle to afford and should only be required to
pay their rent alongside a refundable deposit.
We’re delivering on our promise to ban letting agent fees,
alongside other measures to make renting fairer and increase
protection for renters.
As part of wider plans to improve the rental market, government
has already introduced measures that crack down on the small
minority of rogue landlords that shirk their responsibilities.
Earlier this year, the law was changed to allow councils to
impose new fines of up to £30,000 as an alternative to
prosecution for a range of housing offences.
The draft Tenant Fees Bill, which reflects responses from a public
consultation also published today, will:
-
Cap holding deposits at no more than one week’s rent and
security deposits at no more than 6 weeks’ rent. The draft
bill also sets out the proposed requirements on landlords and
agents to return a holding deposit to a tenant.
-
Create a civil offence with a fine of £5,000 for an initial
breach of the ban on letting agent fees and creating a
criminal offence where a person has been fined or convicted
of the same offence within the last 5 years. Civil penalties
of up to £30,000 can be issued as an alternative to
prosecution.
-
Require Trading Standards to enforce the ban and to make
provision for tenants to be able to recover unlawfully
charged fees.
-
Appoint a lead enforcement authority in the lettings sector.
-
Amend the Consumer Rights Act
2015 to specify that the letting agent transparency
requirements should apply to property portals such as
Rightmove and Zoopla.
More than 9 out of 10 tenants who responded to the government
consultation backed the action to ban letting agent fees, with 7
out of 10 of them saying these fees affected their ability to
move into a new rented property.
Overall more than 4,700 responses to the consultation were
received from a range of individuals and representative bodies
from across the sector.
The government’s housing white
paper sets out measures to build the homes Britain needs
now and to give those that rent a fairer deal. It puts tackling
the high cost of renting at the heart of its plan to fix the
broken housing market.
The new measures set out in the draft bill are now subject to
Parliamentary scrutiny before they can be introduced into law.
All proposals relate to England only. The ban on letting fees
will apply to assured shorthold tenancies and licences to occupy
in the private rented sector.
The consultation on making membership of a Client Money
Protection Scheme mandatory for letting and managing agent will
help to ensure that all tenants and landlords have they financial
protections they deserve.
Client money protection schemes give landlords and tenants
confidence that their money is safe when it is with their agent,
it also means that when things do go wrong – both tenants and
landlords will be compensated if all or part of their money is
not repaid.
The consultation will
run for 6 weeks from 1 November 2017.
Read the government response to the
consultation on banning letting agent fees.
