Tenant Fees Bill to have Second Reading in Parliament Today

The Tenant Fees Bill is to have Second Reading in Parliament Today

The Tenant Fees Bill looks to prohibit landlords and letting agents from charging certain payments, as well as capping holding and tenancy deposits in England.

The bill also makes provisions about the enforcement of the new regulations, amends the Consumer Rights Act 2015, as well as the Housing and Planning Act 2016, including the Client Money Protection (CMP) schemes.

The impact of the lettings fee ban on the sector is unclear as of yet, however, it could reduce the services that letting agents provide as well as cost the sector jobs. It could also make buy-to-let investments less attractive, and perhaps ultimately result in the extra costs being passed on to tenants by landlords.

Impact on the Private Rented Sector

According to ARLA Propertymark’s survey, letting agents have assessed what they think the impact of a ban on fees would be:

  • 90% think that the ban will lead to a rise in rent prices
  • 60% thought that the quality of available properties will decline
  • 40% think that it will result in a fall in employment in the medium to long term
The Tenant Fees Bill is to have Second Reading in Parliament Today

The Tenant Fees Bill is to have its Second Reading in Parliament Today

Key Considerations according to ARLA Propertymark

A ban will not make the market fairer for tenants – If letting agents leave the sector, landlords will likely be unaware of new (and existing) legal requirements, potentially causing widespread non-compliance and putting tenants in danger. This will likely cause added pressure on local authorities as tenants look for assistance.

“A ban will not make the sector more competitive – Banning fees will reduce competition in the market by driving some agents out of business. Those agents that remain in the sector will become more selective about the tenants they choose.

“A ban will not bring clarity and control to tenants and the sector because existing laws are not being enforced – Unless specific funding is set aside for the sole purpose of enforcing these new laws, we will see the same lack of effective enforcement on the ban on letting fees as has been demonstrated on the transparency rules under the Consumer Rights Act 2015.”

Government response

The Government’s official response to the draft Tenant Fees Bill includes what it thinks the impact will be, including the figures that landlords and letting agents might have to foot when the bill comes into place.

The report estimates that in the first year of the policy, it is estimated to cost landlords £82.9m, and letting agents £157.1m.

In terms of how the ban will be enforced, the government aims to establish a lead authority in order to support local authorities, in order to ensure consistency. Tenants will be provided a means of recovering any illegally charged fees. In terms of landlords and letting agents, a first-time breach of the ban could mean up to a £5,000 fine, and this goes up to being unlimited if another breach is made within five years.

Check out this article for more information on the Tenants Fee Bill when it was introduced into parliament.


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