The Government has now introduced the Tenant Fee Bill to the House of Commons.
The Bill proposes to ban landlords and their letting agents from requiring private tenants and licensees in England making payments in connection with any tenancy. Our previous post can be read here. Below is a summary of the Bill.
The ban will apply to assured shorthold tenancies, tenancies of student accommodation and licences to occupy. Payments that will not be subject to the ban include:
- Tenancy deposit (capped at 6 weeks);
- Holding deposit (capped at 1 week);
- Certain payments on assignment, novation or variation of a tenancy when requested by tenant (capped at £50, or reasonable cost if higher);
- Payment associated with early termination of tenancy when requested by tenant;
- Payments in respect of utilities, communication and council tax; and
- Payment for tenant default (capped at the level of landlord’s loss).
The rules in respect of the holding deposit are not quite straightforward. The holding deposit will need to be returned except where the tenant withdraws, fails a right to rent check or provides false or misleading information, which the landlord will consider when deciding whether to grant the tenancy because this materially affects their suitability to rent the property. Where an exception does not apply, and the holding deposit is not returned this will be a civil offence with a £5,000 fine imposed.
Enforcement will be carried out by local authorities and where applicable trading standards. Tenants will be permitted to make an application to the First-Tier Tribunal to recover any ‘unlawful’ fees. Landlords will also be prevented from recovering properties pursuant to an expired section 21 if they have failed to return any ‘unlawful’ fees to the tenant.
An initial breach of the fees ban will be a civil offence with a financial penalty of £5,000. However, where there is a second breach within 5 years this will be a criminal offence which if prosecuted will be a banning order offence and see an unlimited fine imposed. Local authorities that elect not to prosecute may impose a fine of up to £30,000. A fine in these circumstances will not be considered a criminal conviction but further guidance on when and how this power is to be used will be issued soon.
It is likely that as this Bill passes through the House of Commons and Lords it may see some changes. Consequently, any update will be posted until the Bill finally becomes law.