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A Guide to the Tenant Fee Ban

With just over one week to go before the impending Tenant Fee Act 2019 comes into force on 1st June 2019, we explain what it all means.

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The Tenant Fee Ban Act is the biggest change to hit the lettings industry in decades and will undoubtedly be a challenge to all letting agents, many of whom are charging their tenants high fees.  Nationally, it is estimated by ARLA that around 20% of all agents’ fee income is secured through charges made to tenants and for many agents this represents all their profit.  Unfortunately, as a result of the Act, most agents will have to significantly increase their landlord charges and in a recent survey, more than 80% said that they intended to raise their management charge as a means of dealing with their loss in income. 

Tenant Fee Act 1Tenant Fee Act 2

We are in a better position at Humberts because we haven’t charged tenants any administration fees since the draft Tenant Fee Ban bill was announced in 2017

The Act, designed to make renting more affordable and fairer for tenants, prohibits landlords and letting agents from requiring tenants to make certain payments or to take certain steps before, during or after a tenancy.   The ban applies to assured shorthold tenancies, tenancies of student accommodation and licences to occupy housing in the private rented sector in England. Most tenancies in the private rented sector are assured shorthold tenancies.

From 1st June, the only payments a Tenant can be charged in connection with either a brand-new letting, or a fixed term renewal of a tenancy are: 

• The rent
• The tenancy deposit - capped at 5 week’s rent
• A refundable holding deposit – capped at 1 week’s rent
• Late rent fees
• Lost keys
• Payment in respect of council tax, utilities, TV license and communication services
• Changes to the Tenancy (not including tenancy renewals)

Any fee not on the above list is considered a prohibited payment.  Some examples of prohibited payments are:

• Administration fees
• Referencing
• Check-out reports
• Inventories
• Cleaning services
• Gardening services
• Chimney Cleaning

Tenant Fee Act 3Tenant Fee Act 5

The general consensus is that the Act will result in a rise in rents across the UK. Agents in Scotland have been unable to charge tenants fees since 2012 and after the initial period, rents in Scotland have increased year-on-year at a higher rate than any region in the UK.   This is great news for landlords; less so for tenants, whom the fee ban was designed to protect.

The fees ban is only the latest in a long line of changes for the industry and new announcements are coming in constantly.

If you have any queries relating to the Tenant Fee Ban, please do not hesitate to contact Humberts for further advice.   

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