Property professionals would have had to have been living under a rock for the past few years to have not heard of the tenant fees ban. Well, the controversial plans are now set to become law. To help us outline the new rules, Just Landlords has put together a round up.
The specialist Landlord Insurance provider has been keeping on top of announcements relating to the tenant fees ban since it was first discussed, knowing how much disruption it is likely to cause to the property sector (perhaps the biggest shake-up for letting agents in recent years).
Whether you’re an active landlord or passive property investor, you are likely to feel the effects of the upcoming tenant fees ban. Here’s everything you need to know, in order to successfully prepare:
What is it?
The Government’s Tenant Fees Bill is likely to become law in England this year. It will ban landlords and letting agents from charging upfront fees to private tenants. It is believed that letting agents will increase their costs for landlords, in order to recoup some of the lost revenue.
For those that fail to comply with the law, a fine of £5,000 will be charged for the first offence, while civil penalties of up to £30,000 could also be imposed.
When will it come into force?
Provided that the Bill receives royal assent in the coming weeks, it is due to become law on 1st June 2019, applying to all tenancies signed on or after that date in England.
Why is it happening?
The Bill was introduced in Parliament to attempt to make renting cheaper at the outset for tenants living in private rental housing, including reducing the barriers to moving home.
Letting agents have long been criticised for charging exorbitant fees and deposits to tenants.
How will it work?
Default fees will be limited to the following: replacement keys or a respective security device; late rent payments; and a change or early termination of a tenancy, at the tenant’s request.
Landlords and letting agents will also only be able to charge for utilities, communication services and Council Tax, as well as deposits and rent.
At the same time, the Bill will cap holding deposits at just one week’s rent, while security deposits will be capped at five weeks’ rent.
With the tenant fees ban only months away, make sure to familiarise yourself with what it means for your property investments, and assess how it will affect your lettings business.