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Tenant Fees Bill third reading: The Government listens to the NLA on enforcement, deposits and default fees

Article Posted - 6th September 2018

Landlords could be set to lose out financially as the controversial Tenant Fees bill passed its third reading at the House of Commons yesterday afternoon, meaning charging tenants fees could soon be banned alongside other regulatory changes.

Through this clampdown on rental fees, landlords could lose out on millions of pounds under the new default fee provision, in which a landlord or agent will only be able to recover reasonable incurred costs, and must provide evidence of these costs to the tenant before any charges can be made.

The move is designed to ensure that tenants in the private rented sector are not made to pay excessive fees for what is perceived to be minor damages.

Other important amendments brought forward in the reading Bill brought include steps by the Government to reduce tenant wait times to receive their money by reducing the timeframe that landlords and agents can pay back charges deemed unlawful.

The National Landlords Association (NLA) is also pleased to see the cap on security deposits has not been reduced from six weeks. We lobbied the Government on this as six weeks provides a level of flexibility to adjust security deposits when there is potential for higher risk, such as taking on tenants with pets.

We also welcome the focus on enforcement and the commitment of £500k towards enforcing regulations. This is an important factor that we feel has been lacking in many areas, which we pointed out in the evidence we presented to the Public Bill Committee in June. We would push for further interventions and a greater level of funding to ensure local authorities are enforcing regulations to target and rid the private rented sector of criminal landlords.

The clarifications made on the level of the payments, ie reasonable incurred costs, and the need to set out in the tenancy agreement what these payments cover are welcome additions that will make these payments clearer for both landlords and tenants.

However, it should be noted that landlords do not routinely take advantage of default payments and this has the potential to disadvantage small landlords who self-manage their properties. It is unlikely that these landlords would be able to charge for their time in rectifying any defaults as ‘incurred costs', as it may not be easy to provide the necessary evidence.

Commenting on the progress of the bill, Minister Rishi Sunak MP said: “Tenants across the country, whatever their income, should not be hit with unfair costs by agents or landlords.

“This government is determined to make sure our housing market works and this new provision in the Tenant Fees Bill will make renting fairer and more transparent for all.”

From the bills inception, the NLA has consistently challenged the Government's positions on the bill. This was highlighted when our CEO Richard Lambert gave evidence to the bill's committee in June, which you can read more about here.

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