What Landlords should know about the draft Tenant Fees Bill

What landlords should know about the draft Tenant Fees Bill

On 1 November 2017, the draft Tenant Fees Bill (the Bill) was introduced in Parliament.  The rationale behind the Bill was to make it fairer and easier for tenants by removing costly upfront payments and to make private rented accommodation more accessible.

Currently, the Bill is due to come into force on 1 June 2019, but this date may change.  In addition, the final version of the Bill has yet to be drafted with amendments recently being debated and voted on.

The Bill makes various changes that both landlords and letting agents need to be aware of.

Based on the current draft of the Bill, if a landlord decides to take a deposit, the deposit amount will be capped at no more than 5 weeks’ rent where the annual rent is less than £50,000.  Holding deposits which are paid by tenants to secure a potential property are allowed but are capped at 1 week’s rent and cannot be demanded if a previous holding deposit has been paid in relation to the same property by the prospective tenant i.e. only 1 can be charged per property.

Default fees charged to tenants for e.g. replacement keys can only be legally demanded for limited purposes of provision of replacement keys or other security device and late payment of rent. A charge for late payment of rent cannot be made unless 14 days have passed since the full rent was due and has not been paid.  The charge is capped at 3% above the Bank of England base rate.

Any fees that a landlord or letting agent attempts to charge other than those permitted within the Bill will be unenforceable.  In addition, the Bill creates a civil offence with up to a £5,000 fine for an initial breach of the ban and creates a criminal offence where an individual has either been fined or convicted of the same offence within 5 years.  The local authority can choose to impose a financial penalty as an alternative to a prosecution.  This penalty can be up to £30,000.

In addition, no notice can be served pursuant to Section 21 Housing Act 1988 until a landlord has repaid any unlawful charges.

It is the responsibility of local authorities to enforce the ban.

The final wording of the Bill has yet to be published but further commentary will be made once the final version is available.

 

Fiona Squire is a Partner specialising in landlord and tenant advice.  For more information please telephone 01803 403403 or email Fiona on [email protected].