The Tenants’ Fees Bill was announced in the Queen’s Speech on Wednesday. The Bill is designed to stop tenants having to pay letting agent’s fees and limit deposits.
The ban was first proposed by the Chancellor in his Autumn statement of 2016 and a subsequent consultation paper has been published. The consultation was concluded at the beginning of this month and it is likely that the Bill will be passed into law because it has the support of all the main parties.
The Government’s rationale for the ban is that a small minority of letting agents exploit their role as an intermediary between the tenant and landlord by imposing what they consider to be unfair charges on the tenant or double charging tenants and landlords for the same service. Furthermore, they argue that fees which are usually payable at the outset, renewal or extension of a tenancy incentivise some agents to offer short term tenancies but that a ban may encourage longer term tenancies. Finally, that such a ban may also help tenants save for a deposit should they ever wish to buy their own home.
Surprisingly, the Government has also announced that this Bill will include provisions to limit tenancy deposits to the equivalent of one month’s rent. This was not announced when the concept of the original Bill was introduced but the consultation did mention the idea of a deposit cap, although not a limitation of a month. This will undoubtedly be of some concern to much of the sector as most deposits are now the equivalent of 6 weeks rent. The payment of 6 weeks rent in advance was designed to address the situation of the tenant not paying the last month’s rent and leaving the landlord with no security.
The draft bill is expected to be published later this year. Upon publication, we will endeavour to update our readers as soon as possible.