The Tenant Fees Bill is the government’s proposal to clamp down on extortionate letting agent fees charged to tenants when renting property in England. Government figures indicate that it could save tenants around £240 million a year.

Letting Agent Fees For Tenants

Currently when a tenant rents a property in England they are forced to pay tenant reference fees, credit check fees, right to rent checks and administration fees. Unfortunately, some unscrupulous letting agents charge excessive fees for these services ranging from hundreds to thousands of pounds!

What Does The Tenant Fees Bill Propose?

The Tenant Fees Bill proposes to:

  • Ban all upfront fees charged by letting agents before the tenant rents a property.
  • Limit security deposits to a maximum of six weeks’ rent.
  • Limit holding deposits to a maximum of one week’s rent.
  • Limit the charge for a change of tenancy at £50 unless the letting agent demonstrates that greater costs were incurred.

Who Will The Tenant Fees Bill Affect?

The ban on letting agent fees will affect tenants that sign up to assured shorthold tenancies in England.

What Is an Assured Shorthold Tenancy?

It is generally classed as an assured shorthold tenancy if:

  • The property is being rented from a private landlord or housing association
  • The tenancy started on or after 15 January 1989
  • The property is the tenant’s main accommodation
  • The landlord does not live in the property

Check the tenancy agreements guide for further information.

What Is A Holding Deposit?

A holding deposit is a sum of money paid to a landlord or letting agent to reserve a rental property before the signing of a tenancy agreement.

What Is A Security Deposit?

A security deposit serves to protect the landlord if the tenant breaks or violates the terms of the lease or rental agreement. It may be used to cover damage to the property, cleaning, key replacement, or back rent.

The landlord must put the deposit into a government-backed tenancy deposit scheme if the property is let on an assured shorthold tenancy that started after 6 April 2007.

What Are The Penalties For Breaching The Rules?

Letting agents could be fined £5,000 for the initial offence, and potential criminal prosecution or fines of up to £30,000 for perpetual offences. Local authorities will be able to retain the money raised through financial penalties with this money reserved for future local housing enforcement.

When Will The Tenant Fees Bill Come Into Effect?

A Bill is a proposal for a new law, or a to change an existing law, and is presented to Parliament for deliberation. A Bill can start in the House of Commons or the House of Lords and must be approved by both Houses before becoming a Law.

Currently the Tenant Fees Bill has passed approval by the House of Commons and is now being reviewed by the House of Lords. It is anticipated that it will become law no sooner than Spring 2019.