A ban on letting agents fees will save tenants £240m in its first year when it comes into force, says the government, as it was introduced into parliament today.
The proposed Tenant Fees Bill aims to crack down on unexpected letting fees and ensure deposits do not exceed six weeks’ rent to prevent renters from being exploited across England.
With many of the 4.7 million households in the private rented sector in 2016/17 affected, it is expected that the bill, which was first announced in the 2016 Autumn Statement, will increase competition between agents and landlord to drive costs down and boost the quality of services.
New Housing Secretary James Brokenshire MP introduced the bill in one of his first actions in the job having replaced Sajid Javid earlier in the week after he stepped into the void left by Amber Rudd’s Home Secretary resignation.
“This government is determined to build a housing market fit for the future. Tenants across the country should not be stung by unexpected costs,” said Brokenshire.
“That’s why we’re delivering our promise to ban letting fees, alongside other measures to make renting fairer and more transparent.”
The bill also promises to bring in measures to cap holding deposits at one week’s rent with landlords and agents required to return it to the tenant, while tenancy charges will be capped at £50 unless the landlord can demonstrate that greater costs were incurred.
Breaching the ban will result in a fine of £5,000 with a criminal offence for repeat offences within five years. Financial penalties of up to £30,000 can be issued as an alternative to prosecution.
Now that we have greater clarity on what the ban will entail, agents must start preparing for when it comes into force
However, an impact assessment report also published by the government found that the bill could see landlords lose £82.9m while agents could miss out on £157.1m.
Commenting on the bill, David Cox, chief executive of letting agent body ARLA Propertymark, said: “We do not believe the Bill will achieve its aims, as our own research last year demonstrated that tenants will end up worse off and banning fees will not result in a more affordable private rented sector.
“ARLA Propertymark has worked hard over the last 18 months to explain the unintended consequences of the ban to Government, and we’re pleased they have listened and allowed Change of Sharer, Surrender of Tenancy, holding deposits, exempted the Green Deal Charge, and capped security deposits at six weeks, rather than the Committee’s proposed five-week cap.
“Now that we have greater clarity on what the ban will entail, agents must start preparing for when it comes into force.”