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Fees ban Bill brings industry to a ‘fork in the road’, says ARLA Propertymark

ARLA has said that the new draft Tenant Fees Bill brings all agents in England to a “fork in the road”.

In a note to member agents, ARLA Propertymark says that the draft Bill raises “unprecedented questions for the future for the industry”.

ARLA is calling for agents to lobby their local MPs on the draft Bill, which seeks to outlaw all fees charged to tenants.

The full ARLA note to its members, which gives a useful guide to the draft Bill,  says:

“The Government has published a Draft Tenant Fees Bill which raises unprecedented questions for the future of the industry and brings all agencies in England, large and small, to a fork in the road.The Bill seeks to reduce costs to tenants by banning landlords and their agents from requiring any payments from tenants as a condition of granting, renewing or continuing a tenancy with the exception of rent, a refundable tenancy deposit, a refundable holding deposit and tenant default fees (for things like lost keys or late rent payments).

The Bill bans landlords and agents from requiring tenants to secure and pay for services from any third party.

Applicability

Of particular note, Clause 22 indicates that the ban will not be retrospective so tenant fees including those for renewals and check outs relating to tenancies which were in existence before the ban comes into force, will still be payable.

Clause 20 indicates the ban will not apply to either company lets or other non-Housing Act tenancies.

At a glance:

Tenancy deposit

In the Queen’s Speech the maximum tenancy deposit was limited to four weeks’ rent. We made the case repeatedly face to face and in writing that the cap for this needed to be increased to six weeks and we are pleased that the Government has listened to us on this point.

Holding Deposits

In order to remove a property from the market, landlords and agents are permitted to charge a refundable holding deposit of no more than one week’s rent.

The holding deposit must be returned within 15 days if the landlord or agent decides not to take forward the tenancy.

However, landlords or letting agents do not have to refund a holding deposit if:

· a tenant does not have the right to rent property under the Immigration Act

· or if the tenant provides false or misleading information (ie failed referencing checks)

· or if the tenant decides not to enter into the agreement (changes their mind) or fails to take all reasonable steps to enter into a tenancy agreement (deliberately drags their feet).

The holding deposit for the successful tenant can then form part of either the first month’s rent or the tenancy deposit.

 

Enforcement and penalties

Trading Standards can impose fines of up to £5,000 on landlords or their letting agent if it’s beyond reasonable doubt that a tenant has been required to make a prohibited payment, or if the landlord or agent has failed to return a holding deposit. However, this fine can be increased to anything up to £30,000 as an alternative to prosecution for repeat offenders. There will be a right of appeal to the First-Tier Tribunal.

Display of fees

Amends have been made to the Consumer Rights Act 2015 to extend provisions on display of fees in offices and on websites. Fees, Client Money Protection and redress scheme memberships will need to be displayed on the property portals.

A new (and very good) ARLA Propertymark fact sheet outlines clauses of the Draft Bill that all letting agents need to understand.

The legislation is still in draft form. ARLA says: “This is the time for agents to explain the necessity of fees and the consequences to tenants of a ban.”