Residential Letting Agents set to lose £157m due to the Tenants Fee Bill
The government has now introduced its long-awaited Tenants Fee Bill to parliament. It was given its first reading on 2nd May 2018 and will be considered my MPs at its second reading, the date of which is yet to be announced.
The new Secretary of State for Housing, James Brokenshire, has claimed that the new legislation will save residential tenants in England £249m per year in fees paid to letting agents and landlords – with letting agents being the major losers.
An impact statement drafted alongside the bill by civil servants estimates that letting agents will lose around £157m in revenue in the first year after the bill becomes law.
The measure is intended to stop residential letting agents and landlords charging fees other than those linked to:
- A change or early end to a tenancy requested by a tenant
- Utilities, communication services and council tax
- Payments that are the fault of a tenant e.g. replacing a lost key
Only now being discussed, the bill is expected to come into force in 2019.
The Tenants Fee Bill also lists several other measures aimed at cutting costs and safeguarding the right of home renters, including:
- Limiting security deposits to no more than six week’s rent
- Limiting holding deposits to no more than one week’s rent
- Capping charges for changing the terms of a tenancy to £50 unless the landlord shows more expense was incurred
- Imposing fines of up to £5,000 for the first breach of the fee ban, then introducing a criminal offence if someone is fined or convicted of the same offence within five years. Fines of up to £30,000 can be charged instead of taking offenders to court
- Allowing tenants to recover unlawfully charged fees
- Stopping landlords from repossessing a property until they have refunded any unlawfully charged fees
This is a substantial loss for letting agents but has the overarching aim of protecting tenants in the residential sector to make it a fairer and more affordable market.
While many are in support of the bill, it does raise concerns as to how letting agents will cover the cost of the lost revenue. The Association of Residential Letting Agents (ARLA) said in 2017 that 87% of its members think that rent prices will increase as a result.
If you are a residential landlord and are concerned about how the changes will affect you, then contact GA’s residential landlord and tenant team to discuss this further. Call 01752 203500 or email Philip.oke@GAsolicitors.com.