Landlords Could Face Fines of Up to £30,000 For Charging Tenants Extra Fees
Landlords Could Face Fines of Up to £30,000 For Charging Tenants Extra Fees
The government has released details of the long-expected ban on tenants’ fees, which was first proposed in 2016.
Landlords and letting agents could potentially face fines of up to £30,000 for charging tenants fees beyond their rent. Landlords who do not comply in the first instance could be subject to a fine of £5,000, enforced by Trading Standards.
Under the proposals, landlords and their agents will find themselves prohibited from making any charges in addition to rent. Tenant default charges will be an exception to the proposals, as will security deposits, which will be capped at six weeks’ rent, and holding deposits, which will be capped at one week’s rent.
The Government has claimed that the new proposals could save tenants an average of £327 on fees related to renting, with those in London potentially saving £500.
The documents released by the government also propose requiring all letting agents to post details of their regulatory oversight and fee structure on online listing sites.
Seeking to make renting fairer for tenants
In addition, Communities Secretary Sajid Javid is also launching a consultation to ensure that letting and managing agents sign up for membership for client money protection schemes, to ensure that tenant’s money is protected by a protection deposit scheme.
He said:
“This Government is determined to make sure the housing market works for everyone. Tenants should no longer be hit by surprise fees they may struggle to afford and should only be required to pay their rent alongside a refundable deposit.”
He added: “We’re delivering on our promise to ban letting agent fees, alongside other measures to make renting fairer and increase protection for renters.”
Fears over potential rent hikes
Some fear that the government’s proposals will mean that rents are increased in order to offset costs. Policy director David Smith said: “It will depend on whether the agents try to push the fees onto the landlords,” adding “Good agents actually add value for tenants but obviously they are still the landlord’s agent. Many agents for a long time have not focused on value for money.”
Russell Quirk, the founder of online estate agency eMoov, agreed. He said: “There is . . . 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.”
He added: “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.”
Banning of fees ‘could hurt those the government wants to help’
David Cox, the managing director of the Association of Residential Letting Agents, argued: “This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.”
“Most letting agents do not profit from fees. Our research shows that the average fee charged by ARLA Licenced agents is £202 per tenant, which we think is fair, reasonable and far from exploitative for the service tenants receive,” he said, noting “These costs enable agents to carry out various critical checks on tenants before letting a property. If fees are banned, these costs will be passed on to landlords, who will need to recoup the costs elsewhere, inevitably through higher rents. The banning of fees will end up hurting the most, the very people the government intends on helping the most.”
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