Government Publishes Draft Tenants’ Fees Bill

The Government has published its draft Tenants’ Fees Bill, announcing that it will extend a proposed cap on tenancy deposits to six weeks’ rent, rather than four.

The Government first announced that it would introduce a cap on security deposits, along with a ban on letting agents charging fees to tenants, almost 12 months ago in the Autumn Statement 2016.

Initially, the cap on tenancy deposits was set to be at no more than four weeks’ rent. Now, however, the Government proposes extending this cap to six weeks’ rent, following concerted lobbying by the National Landlords Association (NLA).

Chris Norris, the Head of Policy at the organisation, says: “At the time, the NLA argued that an arbitrary cap of four weeks’ rent would be damaging to certain groups of prospective tenants and could have the counter-productive effect of making it harder for some households to secure suitable accommodation in the sector.

Government Publishes Draft Tenants' Fees Bill

Government Publishes Draft Tenants’ Fees Bill

“Since the plans were announced, we have been lobbying the Government and we met with the Minister of State for Housing and Planning, Alok Sharma MP, in September, in order to press him to rethink his plans for a cap; taking into account the needs of those living and working in the private rented sector.”

He continues: “The NLA is happy that the Government has listened to the evidence we presented on behalf of our members. Whilst we remain disappointed that the Government continues to believe a cap is necessary, extending it to six weeks’ rent will reduce those households and landlords disadvantaged by the policy significantly.”

The Chairman of the Residential Landlords Association (RLA), Alan Ward, also responds to the publication of the draft Tenants’ Fees Bill: “It is welcome that greater clarity is being provided to the sector and that ministers have clearly listened on a number of important points. Most notably, proposing to cap security deposits at six weeks rather than one month recognises concerns about the need to ensure protections against tenants’ default on rent payment and damage to property.

“Ultimately though, cutting costs for tenants means boosting the supply of homes for rent. Whilst we recognise the Government’s objectives, this would best be achieved by using the Budget to encourage good landlords to build more homes.”

Russell Quirk, the Founder and CEO of online estate agent, offers his thoughts: “The introduction of this bill brings us a step closer to levelling the playing field between letting agent and tenant, and one that is certainly a step in the right direction. The rental sector can be a minefield of unforeseen costs, and a ban on letting fees should make the whole process a lot more transparent and consumer friendly.

“There is, of course, a danger that these agents will now try and recoup their losses through alternative means, such charging higher fees to the landlord themselves. This would be an around the houses way of bypassing the ban on letting fees, as any additional cost to the landlord is likely to be passed down the line in higher rents. The only upside is that at least this won’t be payable upfront and will go some way in reducing the initial barrier to entering the rental market as a tenant.”

Commenting on the bill, the Chief Exectuive of ARLA Propertymark (the Association of Residential Letting Agents), David Cox, says: ”We have discussed the proposal to ban letting agents fees with Government ministers and officials many times since the announcement. Having now seen the draft bill, it is essential that, during its passage through Parliament, this legislation is shaped to make it fair to consumers, while supporting businesses to carry out the work necessary to create and maintain successful tenancies; including legal requirements such as Right to Rent checks.

“We are very pleased to see that Government has listened to our call and increased maximum security deposits from four to six weeks, and are encouraged that it appears those tenants who wish to break their contract will have to cover the legitimate costs of finding a new tenant.”

In addition, Cox responds to the new consultation on mandatory Client Money Protection (CMP) schemes for letting agents: “After the announcement made during the ARLA conference this year, we are very pleased to see that the Government is moving forward with its plans to introduce mandatory CMP for letting agents. After years of lobbying and a successful campaign alongside Baroness Hayter of Kentish Town, we have finally convinced the Government of the need for this measure. While Propertymark members are already required to have CMP, this new measure will ensure that all letting agents are operating on a level playing field, meaning consumers will be protected regardless of the agent they choose. We are equally pleased that agents will have to display their CMP membership prominently, which will provide tenants peace of mind that their money is protected.

“We urge agents to respond to the consultation, as it is an essential measure that will go a long way to improving the regulatory environment in the lettings sector, and increase the protection for consumers who count on agents to handle their money safely.”

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