Tenant Fees Bill provisions to come into effect June 2019

Article Posted -
15 Jan 2019

Speaking at the third reading of the Tenant Fees Bill in the House of Lords today, Lord Bourne of Aberystwyth outlined that following royal assent, the provisions of the Tenant Fees Bill will come into effect on the 1st June 2019 for all tenancies signed on or after the date.

The third and final reading comes after controversial amendments in the Bills Report Stage, which lowered the deposit cap from six weeks to five weeks for properties with an annual rent of less than £50,000. This will likely affect some tenants’ ability to find a home, especially if they have pets or poor credit history.

In regard to contractual damages, Lord Bourne also provided further reassurance to the house, arguing there is plenty of case law in place that already deals with damages, and this will ensure that they are not used as a back door to default fees.

A statement from the Ministry of Housing, Communities and Local Government said:

“We believe these amendments strike a fair balance between improving affordability for tenants whilst ensuring that landlords and agents have the financial security they need.”

Key Points of the Bill:

  • Default fees will be limited to charges for replacement keys or a respective security device, and late rent payments only
  • Cap holding deposits at no more than one week’s rent, applying to a maximum of one property only
  • Security deposits will be capped at five weeks rent
  • Creates a civil offence with a fine of £5,000 for a first offence and civil penalties of up to £30,000
  • Amend the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla
  • Local authorities will be able to retain the money raised through financial penalties with this money reserved for future local housing enforcement.

Alongside 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 such as replacing lost key.

After it leaves the Lords this evening, the Bill will return to the Commons, after which it will receive Royal Assent and become law.

A lead local authority will police and oversee the new measures will be announced next month, something which the NLA has repeatedly pressed for clarification on regarding enforcement.

You can read more NLA coverage and campaigning on the bill here, here and here

Comments

Submitted by JakeM on 21 January 2019 - 11:30am

The one week rent cap applies to holding deposits, it is security deposits that will be capped at five weeks rent.

Submitted by 128776 on 19 January 2019 - 8:32pm

Can this article make things clearer for landlords, please? Does this mean the deposit held for potential damages will be limited to 5 weeks rent? Will landlords (either private or agency) not be able to charge for credit and referencing checks and deposit protection which is normally a cost to the landlord? Will there be no ability for either private or agency landlords to charge for any administration costs (time etc.) in setting up a tenancy agreement, carrying out check-in and check-out procedures? Is a holding deposit a deposit used to secure a property prior to tenancy agreement signature which is ultimately deducted from the first rent charge or not refunded if the tenant walks away without signing?

Submitted by 172197 on 18 January 2019 - 1:53pm

Yes, it is not very well written. I had to read it several times to get what they are actually trying to say.

Submitted by 010609 on 17 January 2019 - 8:18pm

Its was a holding deposit - I had to read it twice. Holding the property, not the actual depaosit, that is now 5 weeks. :(

Submitted by 174083 on 17 January 2019 - 2:45pm

One weeks rent for a deposit? I thought it was going to be 4 or 5 or am I missing something

Submitted by 127748 on 17 January 2019 - 11:28am

1. What is the 'cap' and what is the 6 - 5 week relevance?
2. Is the new maximum deposit equal to one weeks rent?
3. Deposit for one property only - what does this mean?
4. Who care what platitudes the Ministry issues - how about a focus on how this affect landlords.

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