On Wednesday 2 May 2018, the Government introduced the Tenant Fees Bill following pre-legislative scrutiny and recommendations from the Housing, Communities and Local Government Select Committee. All measures relate to England only.
A ban on letting fees was announced at Autumn Statement 2016. The Tenant Fees Bill reflects feedback from the recent public consultation. A draft Tenant Fees Bill was published by the Government on 1 November 2017. It underwent pre-legislative scrutiny by the Housing, Communities and Local Government Committee.
What London tenants can expect from the new legislation
Under the Tenant Fees Bill, a deposit at the start of a tenancy cannot exceed six weeks’ rent. Holding deposits will be capped at no more than one week’s rent. The Government has decided not to lower the cap on tenancy deposits to five weeks’ rent. They do, however, state that a deposit of six weeks’ rent is an upper limit and not a recommendation. Landlords will consider on a case by case basis the appropriate level of deposit to take.
Alongside the rent and deposits, letting 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 such as replacing lost key.
The Bill caps the amount charged for a change to tenancy at £50. The charge can be altered if the landlord demonstrates that greater costs were incurred.
A focus of the Committee was enforcement action. The legislation will require Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees via the First-tier Tribunal. Additionally, the Bill prevents landlords from recovering possession of their property until they have repaid any unlawfully charged fees.
A fine of £5,000 will be applied for an initial breach of the ban with a criminal offence where a person has been fined or convicted of the same offence within the last five years. Financial penalties of up to £30,000 can be issued as an alternative to prosecution. The money received will be retained for future local housing enforcement.
The new legislation comes into force in 2019
Now that there is greater clarity on what the ban will entail, agents must start preparing for when it comes into force. The Tenant Fees Bill is now subject to Parliamentary timetables and will be introduced in law next year.
Are you a tenant or landlord in Canary Wharf?
If you need more clarification on this new legislation, contact the Henry Wiltshire lettings team in our Canary Wharf Office.