New rules ban rip-off lettings fees

In a move which will save renters an estimated £240 million a year, new rules are now in force governing what fees can be charged by lettings agents for people looking to rent a new home.

The ban on such fees is now in place in England and Wales two and a half years after it was first proposed, bringing them into line with Scotland which made the change in 2012.

Fees

It means prospective tenants will no longer face fees for services including viewings, credit checks, references and setting up a tenancy.

But landlords are claiming rents could rise and choice of properties fall as a result of the ban.

New rules

Under the new rules you can’t be charged for:

  • Viewing a property
  • For a reference or credit checks
  • Insurance policies
  • Guarantor requests
  • For costs to cover ’admin’ including things like referencing, credit checks and guarantors
  • Renewal fees for tenancies taken out after June 1 2019
  • Charging for a professional clean, unless they have good reason – and evidence – to
  • Gardening services.

Hefty

Journalist Miles Brignall said: “Gone are the £300-plus admin fees and the £100 credit-check fee, the hefty extra charge if you want to keep a cat, or the steep surcharge to move in or out on a Saturday – charges that became routine and could add as much as £800 to the upfront cost of renting a property.

“From today, a whole raft of often hidden and unfair charges are being swept away for anyone entering into a tenancy agreement. An estimated 4.8 million renting households in England are expected to benefit, saving anything from £200 to £800 for each move.”

Tenant Fees Act

The costs will now have to be picked up by agents and landlords under the Tenant Fees Act. The new rules also prevent them from charging a higher rent for the first month to cover the costs.

But the new rules have not put a complete ban on upfront fees which landlords can charge. Fees still payable include:

  • Rent
  • A tenancy deposit
  • A holding deposit
  • Replacing lost keys
  • Any changes you request to your contract
  • Bills such as water, broadband, TV licence and council tax
  • Terminating your contract early
  • Late rent payments (after 14 days)
  • Cleaning fees in extreme circumstances.

However, security deposits will be limited to five weeks’ worth of rent for properties costing less than £50,000 annually to rent, or six weeks for higher-value renting. Holding deposits are capped at one week’s rent.

Any landlord or agent found to be charging illegal fees in future can be fined £5,000 for a first offence. If they repeat the offence within five years the fine can be unlimited.

Negotiating power

Generation Rent was at the forefront of the campaign and director Dan Wilson Craw said: “The ban on letting fees won’t just save tenants money when they move home – it also gives them more negotiating power with their landlord.

If faced with a rent increase or failure to fix a faulty boiler, tenants can now threaten to move out with more credibility, which should make the landlord think twice.

“But the lettings industry has a reputation for inventing things to charge tenants for, so we still need to beware of attempts to get around the law.

For the ban to work, local councils must use their powers to crack down on illegal practices – and tenants need to know when to report dodgy behaviour in the first place.”

Landmark

Gillian Guy, chief executive of Citizens Advice, added: “This is a landmark moment for the millions of people who rent privately.

“For too long, families and other renters have had to hand over hundreds of pounds on unfair and uncompetitive letting fees every time they moved home.”

Biggest change

An agents’ trade body has described the new legislation as ‘the biggest change to hit the lettings industry in decades’.

One lettings agency manager claims agents will have to pass on costs to landlords who will, in turn, pass them on to their clients in higher rents.

Leona Leung also prophesied: “The small landlords and local agents could be out of the business very soon. It is a loss for everyone – tenants, landlords and agents.”