The Tenant Fee Bill. We all know it’s coming – and we all know that from 1st June 2019, we can wave goodbye to any fees for credit checks, references and all the other administrative tasks associated with renting property. But what about the finer details – some of which have taken months to hammer out? For those of us who don’t know the ban back to front, here are ten of the lesser-known facts about the most controversial Bill since Clinton:
While agents can no longer charge for inventories, renewal or exit fees, references, references, guarantors or credit checks they can still charge referral fees. Industry experts, however, warn unless there is increased transparency around these ‘referral fees’ these too could face a crackdown.
Agents can no longer charge a holding deposit for tenants who wish to bring a pet into the property. They are also now banned from charging a higher deposit to animal owners, although they are allowed to build the additional charge for having a pet into the rent – as long as they’re open and transparent about charging a higher tariff.
The amount that can be charged as a deposit has been capped at five weeks’ rent a year (or six weeks for those lucky enough to own properties that glean over £50,000 in annual rent).
Up until 31st May 2019, fees can be charged as normal and agents do not need to return fees to existing tenants. But from 1st June 2019, all fees as detailed above are banned.
The fine for a first fee-related offence is £5,000 but if an agency continues to flout the ban, they could face a fine of up to £30,000 or a criminal charge. Ouch!
Tenants can still be charged for late (over 14 days overdue) rent – though agents are not allowed to charge more than 3% over Bank of England base rate in interest.
Agents are still allowed to charge for a change in tenancy or to add a new person to the tenancy agreement but the amount is capped at £50 per occasion.
It’s been estimated that agents could use up to 30% of their income when the ban comes into effect. There are, however, lots of ways to offset the hit – by diversifying your portfolio or aggressively targeting new business. Check out Fixflo’s library of e-books on growing in the face of adversity.
Despite concerns that the ban would lead to rent rises as agents tried to pass on the cost, evidence from Scotland (which implemented a ban on letting fees in 2012) suggests this will not be the case. Scotland saw only marginal rent increases following the ban – and that was without a Brexit-related market depression in prices to contend with.
The Tenant Fee Ban Bill was subject to lengthy delays, all over a case of missing keys. Those on both sides of the bill argued for months as to whether agencies should be allowed to charge ‘default fees’ for cases when a tenant was not present to let workmen into the property. In the end, the ban states that no such fees can be charged, with the exception of missing keys, which the agency can charge a penalty to replace.
