Draft Tenants’ Fees Bill Published – Government Listens to NLA on Security Deposits

Article Posted -
01 Nov 2017

DCLG

The Government has today (1st November) published its draft Tenants’ Fees Bill which will ban all letting fees charged to tenants by agents and landlords in England

The Government first announced in that they would ban letting agents’ fees almost 12 months ago in the Autumn Statement 2016. From April to June 2017 the Government held a consultation on introducing a ban on letting agent fees paid by tenants which received over 4,700 responses.

The Government had initially proposed in the consultation to cap security deposits at no more than 4 weeks’ rent. Richard Lambert, CEO of the NLA, met with the Minister of State for Housing and Planning Alok Sharma MP in September and pressed him to rethink the level of this cap.

The NLA argued that imposing an arbitrary cap on security deposits of one month’s rent would have unintended consequences, which could be damaging to certain groups of prospective tenants. It could also have the counter-productive effect of reducing some households’ abilities to secure suitable accommodation in the sector.

The NLA is therefore happy that the Government has listened and will place the level of the cap at no more than 6 weeks’ rent.

The main measures contained in the draft Tenant Fees Bill will:

  • Ban letting agents or landlords from charging fees for the granting, renewal or continuation of a tenancy.
  • 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.

The publication of the draft Tenants Fees Bill marks the next step towards banning fees charged by letting agents and landlords as a condition of granting, renewal or continuance of a tenancy in England.

You can read the Bill in full here, with explanatory notes.

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.

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