Historically, letting agencies charged tenants letting fees. The agency would rent out a property on the landlord’s behalf and then charge the tenant part of the price of the service. The Tenant Fees Act 2019, however, puts a stop to this practice in a bid to reduce hidden costs for renters.
What Is The Tenant Fees Act 2019?
The Tenant Fees Act 2019 is an act of Parliament which states that it is now illegal for tenant agencies to charge hidden fees.
There are two main stipulations in the Act that will affect renters:
- The Act bans letting fees altogether. The quoted rent will now cover all agency fees.
- The Act reduces the total amount that landlords can charge for deposits.
Parliament passed the new law in February 2019 and it came into force on 1st June 2019. All agencies, therefore, must stop charging letting fees from that date.
Agencies and landlords who flout the rules risk hefty fines. The law allows the courts to impose a penalty of £5,000 on landlords who ignore the rules, going up to £30,000 for repeat offenders.
The hope is that the new law will put a stop to some of the abusive tactics landlords and agencies use to extract money from tenants. Many tenants often face unjustifiably high expenses for the replacement of new items, like smoke alarms, which landlords use as a tool to deduct large sums of money from their deposits. The money confiscated by agencies and landlords is often not proportional to the repairs that need to be carried out.
How Will The New Bill Affect You?
The changes for renters will be considerable.
The most significant change for most renters will be lower deposits. Holding deposits will now be limited to one week’s rent, vastly cutting down on the industry standard of charging around five weeks.
The new Act also caps the amount that landlords can charge for a change in tenancy to £50. From now on, landlords will have to prove that their admin costs are higher than this if they want to charge more
The other significant change is the end of letting fees, a practice which Scotland banned in 2012. Before the law came into force in June, tenants had to pay letting agencies monthly or annual fees. The government, however, believed that it was unfair that tenants should have to pay for services enjoyed by the landlord, and so it has put an end to the practice.
The law will also make it easier for renters to claim back money that landlords have charged them unlawfully. Landlords and agencies now have less time to pay back renters if they charge them money they shouldn’t.
The total savings for private renters could be considerable. The government estimates that the average renter could save up to £70 per household. Whether the net effect of the new law will be positive for renters remains unclear. Agencies could respond by putting up rental prices to cover their letting costs.