Tenant fee ban not expected until spring 2019
by Patrick Garratt - 12th January 2018
Fee ban currently grinding towards Parliamentary scrutiny
The government confirmed that its proposed ban on letting agents and landlords charging fees to tenants wouldn’t come into force until next spring, at the earliest. Previously, many in the property sector anticipated a change as early as October 2018.
The government’s timetable was confirmed by the National Approved Letting Scheme (NALS), which published the news on 10th January. (Source: www.nalscheme.co.uk/tenant-fee-ban-not-spring-2019/.) However, they were beaten to the scoop by that stalwart of consumer affairs broadcasting Radio Four’s You and Yours programme. (Source: www.bbc.co.uk/b09jbscp.)
Before Committee
Speaking to Property Eye, David Cox, CEO of ARLA put the delay down to the timescales that Parliament operates under. Put simply, democracy takes time.
The bill is still being scrutinised by the Draft Bill Committee, which has just begun to hear evidence. Once this process is completed, the committee will need to make its recommendation to ministers. Only then, will the ban begin making its way through the Parliamentary process.
Even after the tenant fee ban meets the approval of both the Commons and the Lords, according to Cox:
“Government will still need to put together the secondary legislation, which will need to go back before Parliament for approval before the ban actually comes into force. Therefore, when considering all these steps, at this stage April 2019 seems to be a likely date for the ban to come into force.”
In their announcement, Isobel Thomson, CEO of NALS, reached out to the government to use this scrutiny to:
“Look again at the proposals and consider tenant fees in a broader, coherent framework of regulation for the [private rental sector].”
However, for anyone who is hoping that the torpidity of the ban’s progress means that it never makes it onto the statute books, the Ministry for Housing, Communities and Local Government has said:
“We announced our Tenant Fees Bill, which has been first published in draft so it can be fully scrutinised by everyone affected. As confirmed in our written evidence to the Communities and Local Government Select Committee, we expect the ban to come into force after spring 2019.”
(Source: www.londonlovesbusiness.com/landlords-warned-to-still-be-prepared-for-lettings-fees-ban/.)
Holding deposits
When we wrote about the ban in November 2017, the proposed rules on handling holding deposits said that the time a landlord or agent could be completed from the time of collecting a holding deposit would be 15 days. (Source: www.purplefrogproperty.com/draft-tenant-fees-bill/.)
These funds would then need to be returned seven days after the tenancy had been completed. Since writing this, more detail has come to light.
Website Lexology reports that this money does not have to be refunded under the following conditions:
- The tenant fails to enter the tenancy agreement
- They do not have a right to rent in the UK
- They have provided false or misleading information that materially affects their suitability to rent the property
(Source: www.lexology.com/library/detail.aspx?g=502415b8-4625-4be8-b010-c0de472866a6.)
The ban covers fees, including holding deposits and deposits that agents and landlords can charge to tenants or prospective tenants.
While Purple Frog has always ensured that the fees we charge to tenants are as low as possible, research has shown that renters pay an average of £200-£300 in letting fees, with reports of some paying upwards of £800. Homeless charity Shelter has reported that one in seven tenants pays more than £500. (Source: www.theguardian.com/property-renting-letting-agent-fees-cap-deposit-costs.)
We’re broadly in favour of anything that will make the rental market easier to use for young people.
Reshuffle
Meanwhile, the cabinet reshuffle may not have set the world alight, but it did send a small shiver of excitement through the property sector. We have a new Housing Minister join the Ministry of Housing, Communities and Local Government.
The main source of the commotion is, Dominic Raab ( the new appointee’s) June 2014 opposition to a proposal by the Labour party that included a ban on letting fees.
You can read the Draft Tenant Fees Bill, here: www.gov.uk/government/Tenant_Fees_Bill_Web_Accessible.pdf