Tenant Fee Ban in the UK

30 December 2019

The introduction of new legislation which will ban landlords and Estate Agents from charging the tenant or tenants a fee for any reasons such as setting up the application, preparing the tenants agreement, inventory check etc. has been introduced in the Tenant Fees Act 2019. This is good news for the tenant as they will save money but on the other hand will reduce the income for the estate agent. Estate Agent normally charge the tenant a fee on signing the tenancy agreement, plus they will charge the landlord a fee for a new tenancy agreement sign up. The fee normally covers the cost of admiration, advertising, time spend showing prospective tenants around the property.

 

Therefore lettings agents and landlords will no longer be able to charge for the following:

 

o   Admin charges

o   Credit checks

o   Referencing

o   Charging for guarantors

o   Property inventories

o   Cleaning services when vacating the property

o   Defleaing a property as a result of tenants having pets

o   Gardening services

o   Set requirements to having specific insurance companies

o   Renewal and exit fees

 

Tenants also won’t have to pay more than one week’s rent for a holding deposit and six weeks’ rent for the actual deposit.

Where a breach has occurred and a banned fee or payment is taken, tenants will be able to get any money wrongly paid back via the county court. Local Trading Standards are supposed to assist tenants with this in some fashion once it comes into force.

In addition, local trading standards will be required to enforce this legislation and will issue a fine of up to £5000 for a first offence. Subsequent breaches are criminal offences or alternatively, the landlord can be fined up to £30,000 as a civil penalty and be subject to a banning order.

If Landlords instruct an Estate Agent to manager their property or properties, this would mean that Landlords will incur higher fees compensating for the loss in come from tenant fees. However it is probably more advisable to employ a professional Estate Agent to deal with your lettings and management of your property, to guide the landlord through the massive amount of legislation imposed. As the fines for non-compliance can be very high.  

This means that rents have increased to cover for the loss in income from tenants fee application. Letting agent trade body ARLA Propertymark said the number of agents reporting they had seen rents rise hit the highest figure on record in June 2019, up 22 per cent from May 2019 which was a previous record high.

 

Even according to the Royal Institution of Chartered Surveyors (RICS), they have claimed that rents have continued to rise across all regions of Britain (June2019). With increase in demand for affordable rental properties, the issue of rent increases will continue.

 

According to the RICs latest October 2019 report  they have commented: “In the lettings market, the quarterly (seasonally adjusted) figures on tenant demand point to another slight acceleration in growth in the three months to October. Indeed, the net balance picked up to +22%, the firmest reading since the end of 2016. At the same time, new landlord instructions slipped once again, with the pace of decline seemingly gathering momentum over the quarter (in net balance terms). On the back of this, rental growth expectations for the near term strengthened further, with every UK region/country projected to see an increase in rents over the coming three months.”

At Enviro Estates we current do not charge majority of our prospective tenants any fees. 


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