Ban on lettings fees from June 1st

A ban on charging lettings fees by agents for the setting up of a new tenancy will be banned from June 1st.

The measure has been included in the Housing Bill currently going through Parliament where housing spokesman Lord Bourne of Aberystwyth said: “We need to enable agents and landlords following Royal Assent to become compliant but we intend for the provisions to come into force on June 1st 2019.

This would mean the ban on lettings fees would apply to all tenancies signed after this date.”

Upfront fees

The ban is on the upfront fees currently charged by lettings agents before they rent a property to a prospective tenant.

They include administrative fees, credit check fees, tenancy renewal fees and referencing costs.

In future these must be borne by the lettings agent or passed on to the landlord. The only fees renters will legally obliged to pay are the rent, a refundable security deposit, a refundable holding deposit and ‘default fees’ like loss of keys or late payment of rent.

Deposit cap

The new legislation will also include a security deposit cap of five weeks’ rent, a week less than was originally proposed.

Renters have reported delays in repaying deposits after they move homes has caused them financial problems as they start their new tenancy.

Forced to wait

In a recent survey by Nationwide, almost a fifth of those renting from private landlords said they were forced to wait more than three months to get their money back and 4% had waited more than six months.

A leading deposit protection scheme says the money should be handed over within 10 days of a tenancy ending, but landlords suggest that disputes could be the cause of the delays.

Transferable deposits

Nationwide spokesman Paul Wootton suggested: “To ensure all private tenants have a better and more uniform experience, we need to consider more pragmatic solutions, including transferring deposits from one tenancy to the next, providing appropriate short-term loans or a guarantee.”

Consumer champion Which? proposed a different solution – an affordable insurance-backed scheme.

Credit card

Their research into the problem found tenants planning a rental move had to use a credit card, loan or overdraft, or borrow cash from friends and family, to pay for a deposit on their new home and moving costs.

Spokesman Alex Neill said: “The number of people going into debt to cover the cost of a new deposit is concerning, particularly when you consider that many are forced to wait a significant time to get their previous one back, and could then face deductions that they don’t think are reasonable.

“The findings highlight how the deposit system is crying out for reform so that it is fit for purpose for the record numbers of people who are living in rented accommodation.

We believe that the government must tackle the issues that we have identified in our report head on to ensure that the rental market delivers for consumers.”