The Tenants’ Fees Bill has now become law, receiving formal Royal Assent yesterday afternoon - and within minutes, the government issued a press release boasting about the measure.
The statement confirms that tenancy deposits will be capped at five weeks’ rent, and that the new rules come into effect on June 1.
The measure, says the government announcement, “puts an end to costly fees imposed by landlords or agents … It is expected to save tenants across England at least £240m a year, or up to £70 per household.”
Communities Secretary James Brokenshire MP says: “Tenants across the country should not be stung by unexpected costs from agents or landlords.
“This Act not only delivers on our promise to ban letting fees but also caps deposits at five weeks’ rent and sets out how and when landlords can charge tenants fees – helping renters keep more of their hard-earned cash.
“This is part of our ongoing action to make renting fairer and more transparent and make a housing market that works for everyone.
“Under the Act, landlords and agents are only able to recover reasonably incurred costs from tenants and must provide evidence of these costs before they can impose any charges.
“This will put a stop to, for example, tenants being charged hundreds of pounds for a damaged item that actually only costs a few pounds to replace – such as £60 to replace smoke alarms.
“The Act also ensures that tenants who have been charged unfair fees get their money back quickly by reducing the timeframe during which landlords and agents must pay back any fees that they have unlawfully charged. Taken together, these provisions help reduce the costs that tenants can face at the outset, renewal and termination of a tenancy.”
In summary, the new Act is:
- capping security deposits at no more than 5 weeks’ rent and holding deposits at no more than 1 week’s rent. It also sets out the proposed requirements on landlords and agents for returning a holding deposit to a tenant;
- capping the amount that can be charged for a change to a tenancy at £50 unless the landlord demonstrates that greater costs were incurred;
- creating a financial penalty with a fine of £5,000 for an initial breach of the ban with a criminal offence where a person has been fined or convicted of the same offence within the last five years. Financial penalties of up to £30,000 can be issued as an alternative to prosecution;
- requiring Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees via the First-tier Tribunal;
- preventing landlords from recovering possession of their property via the section 21 Housing Act 1988 procedure until they have repaid any unlawfully charged fees;
- enabling the appointment of a lead enforcement authority in the lettings sector;
- amending the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to online property portals such as Rightmove and Zoopla;
- enabling local authorities to retain the money raised through financial penalties with this money reserved for future local housing enforcement.
You can see all the official documentation relating to the Act here.
Brokenshire claims that the act - first announced in November 2016 - is part of a wider package of government reforms “aimed at rebalancing the relationship between tenants and landlords to deliver a fairer, better quality and more affordable private rental market.”
He says: “We have introduced a range of powers for local authorities to enable them to crack down on the small minority of rogue landlords and agents who let unfit properties. This includes fixed financial penalties of up to £30,000 and banning orders – possibly for life – for the most serious offenders.
“Ministers have also extended mandatory licensing for Houses in Multiple Occupation to improve living conditions of tenants in shared homes and tightened up rules on smoke and carbon monoxide detectors.
“Private tenants can also apply for a refund of up to 12 months’ rent if their landlord does not deal with health and safety hazards in their home.”