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Tenant Fees Draft Bill

2nd Nov 2017

Category: Property headlines

Tagged: TenantFees, Tenantfee, lettingag, feeban, Legislation, Regulation, Government

The draft Tenant Fees Bill has been released bringing clarity and understanding for landlords and agents.

The draft tenants fees bill has just been released and includes some clarification around how the government proposes to handle agent fees. 

Below are the key points for landlords and agents to take note of: 

i) Damage deposits are capped at 6 weeks rent

- This is good news and strikes a sensible balance between the needs of the landlord and tenant.

ii) Refundable holding deposits are capped at 1 weeks rent ...... but there are provisions for withholding this in the event a tenant doesn't agree a tenancy within a defined period. 

 - As expected.  The bill has dedicated an entire schedule to the topic and it's quite wordy.  In summary the bill suggests that refundable holding deposits are a permitted fee but there are key restrictions on the timeline by which both landlord and tenant must act. 

iii) One off inflated rents are deemed a prohibited payment. An initial payment of rent cannot be higher than any subsequent months rental amount. 

- Wordy but is intended to prevent fees being replaced by an inflated payment in month 1 of a tenancy. 

Comfort Opinion

The headline here is that upfront fees to tenants are being banned.

This draft is generally as expected with some sensible proposals around deposit amounts and allowable default fees. 

The ban on tenant fees will almost certainly result in increase agency fees for landlords who must also be vigilant for agents who rely on high tenant fees and may try to cut corners on referencing or tenant due diligence in response to the loss of fees as a result of the ban.

Although intended to reduce costs for tenants the move away from up front fees may well just result in wide ranging rent increases penalising those tenants who stay in a rented property over longer terms rather than those who are highly mobile and move frequently (and who would normally have paid fees each time they moved).

Ben Harrington

Comfort Partner

An experienced Chartered Accountant and Founding Partner of Comfort Lettings.

Connect with me on Linkedin

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