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Letting fees to be banned from June

Letting fees to be banned from June

Landlords and letting agents in England are set to be banned from charging tenants letting fees from 1 June. 

A ban was first mooted in 2016, when Chancellor Philip Hammond said he hoped to bring in new rules "as soon as possible" in his Autumn Statement.

This week, the date for the ban was announced in the House of Lords, meaning that tenants won't be charged £100s in admin fees on tenancies signed on or after 1 June 2019.

Letting fees are already banned in Scotland. While they're still legal in Wales and Northern Ireland, a ban was put before the Welsh Government last June.

See 50+ Renting Tips for more info on renting safely and cheaply.

What are the new letting fees rules in England?

At the moment, tenants can be charged admin fees – such as tenancy renewal fees, referencing fees and credit check fees – by landlords and letting agents. According to Citizens Advice, the average amount paid is £400.

But landlords and their agents will no longer be able to charge the fees for tenancies signed on or after 1 June.

Any costs will now need to be met by the landlord – and some have warned landlords may up their rents to recover these costs as a result.

From 1 June, the only costs landlords and agents will be able to charge tenants for will be:

  • Rent.
  • Utilities and council tax if included within the tenancy.
  • A refundable deposit, capped at six weeks' rent. The cap could be five weeks' rent for properties where the annual rent is less than £50,000, under an amendment put forward in the House of Lords.
  • A refundable holding deposit to reserve the property, capped at one week's rent.
  • Changes to the tenancy requested by the tenant, capped at £50 (or "reasonable costs").
  • Early termination of the tenancy requested by the tenant.
  • Defaults by the tenant, such as fines for late rent payments or lost keys. These must be "reasonable costs", with evidence given in writing by the landlord or agent.

Any other fees will be banned, and landlords or agents found charging the fees could be fined £5,000 for a first offence. If they break the rules again within five years, they could be given an unlimited fine.

What happens next? 

The Tenant Fees Bill, which sets out the new rules, has now been through both the House of Commons and House of Lords and has had what's known as its 'third reading', so it's almost finalised and the ban should come into force on 1 June (subject to amendments and parliamentary timetables).

But it hasn't yet become law, as it still has to jump through a few more parliamentary hoops.

The bill will now be sent back to the House of Commons, so MPs can debate the final amendments made in the House of Lords. After this, the bill will receive 'royal assent' and will become law.

What does the Government say?

Speaking in the House of Lords, Lord Nick Bourne of Aberystwyth said: "[We] intend for the provisions of this bill to come into force on 1 June 2019. This would mean that the ban on letting fees would apply to all new tenancies signed on or after this date.

"It has been clear throughout that this is a bill that we all support, and one that will deliver important changes to the private rented sector, improving lives for millions of tenants."