The Ban on Letting Agent Fees - England

Timeline of events:

12 February 2019
The Tenant Fees Bill was given Royal Assent, passing into law as the Tenant Fees Act 2019.

15 January 2019
Parliamentary Under-Secretary of State in the Ministry of Housing, Communities and Local Government, Lord Bourne of Aberystwyth announced that the ban on tenant fees will apply to all tenancies commencing on or after 1 June 2019.

5 September 2018
The Tenant Fees Bill completed its passage through the House of Commons with minor amendments. The Bill was moved on to the legislative stages in the House of Lords the following day.

2 May 2018
The Tenant Fees Bill was introduced to Parliament by Housing Secretary, James Brokenshire MP. The Government also issued their official response to the HCLG Select Committee report on the draft Tenant Fees Bill. 

1 November 2017
The Government introduced a draft Tenant Fees Bill to Parliament to ban letting fees for tenants. The Government’s intention to do this was announced 21 June 2017 in the Queen’s Speech at the state opening of Parliament.

7 April 2017
The Government launched an eight-week consultation seeking views on the detail of how a ban should be introduced. The consultation closed 2 June and 4,724 responses were received from a range of individuals and representative bodies. The responses to the consultation have informed the Government’s approach and publishing the Bill in a draft will ensure that there is scrutiny of the Government’s proposals by parliamentarians and stakeholders before introducing legislation.

Tenant Fees Act

The Tenant Fees Act sets out the government’s approach to banning letting fees for tenants. The key measures of the Act include:

  • Security deposits must not exceed the equivalent of five weeks' rent (unless the annual rent exceeds £50,000 in which case deposits are capped at six weeks’ rent).
  • Holding deposits will be capped at no more than one week’s rent. The Act also sets out the proposed requirements on landlords and agents to return a holding deposit to a tenant
  • The amount that can be charged for a change to tenancy will be capped at £50 unless the landlord demonstrates that greater costs were incurred
  • A fine of £5,000 for an initial breach of the ban with a criminal offence where a person has been fined or convicted of the same offence within the last 5 years. Financial penalties of up to £30,000 can be issued as an alternative to prosecution
  • Trading Standards will enforce the ban and will make provisions for tenants to be able to recover unlawfully charged fees via the First-tier Tribunal
  • Landlords are prevented from recovering possession of their property via the section 21 until they have repaid any unlawfully charged fees
  • Enabling the appointment of a lead enforcement authority in the lettings sector
  • The Consumer Rights Act 2015 is amended to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla
  • Local authorities are able to ring-fence any money raised for future local housing enforcement

Alongside rent and deposits, agents and landlords will only be permitted to charge tenants fees associated with:

  • A change or early termination of a tenancy when requested by the tenant
  • Utilities, communication services and Council Tax
  • Payment of damages where the tenant has breached terms in their tenancy agreement
  • Payments arising from a default by the tenant where they have had to replace keys or a respective security device, or a charge for late rent payment (not exceeding 3% above the bank of England base rate)

Commenting on the Tenants Fees Act

“We’ve known the tenant fees ban has been coming for a long time, agencies across England must now ensure that they are putting plans into action and taking all steps necessary to prepare.

“Now that we have legislative certainty and know that the legislation will come into force on 1 June, the Government will prepare to publish more detailed guidance and that will give agents a better understanding as to how the ban should be practically implemented.

"We will be launching a Tenant Fees Toolkit at the ARLA Propertymark Conference on 2 April and this will help to give members clarity in overcoming the legal challenges of the Act.” 

David Cox
Chief Executive, ARLA Propertymark

Further information and tickets for ARLA Conference 2019 are available here.

Tenant Fees and AML Roadshow

We're putting on some extra events to support members as we head towards the implementation date on 1 June with David Cox giving an update on the legislation and how it could affect your business. ARLA Propertymark board member John Paul will also be joining us to share business tips and insights to help your business thrive post fee ban.

And to round up the session NAEA Propertymark Chief Executive, Mark Hayward will be looking at anti-money laundering legislation and discussing estate agent referral fees following the announcement the National Trading Standards Estate Agency team will be providing new guidance.

These events are free for members but non-members will be charged £85 +VAT.

LONDON

Friday 3 May
09:00 - 12:30
Cavendish Venues, EC3N 2LB

More info

LEEDS

Thursday 9 May
09:00 - 12:30
Oulton Hall, LS26 8HN

More info

MIDLANDS

Friday 10 May
09:00 - 12:30
Stratford Manor Hotel, CV37 0PY

More info

EXETER

Thursday 30 May
09:00 - 12:30
Exeter Racecourse, EX6 7XS

More info

Our Position

Our research shows that the average fee charged by an ARLA Propertymark Protected agent is £202 per tenant. We think is fair, reasonable and far from exploitative for the services tenants receive including completing various critical checks on tenants before letting a property. We believe that the ban on fees will involve passing the costs on to landlords. Who will then look to recoup these costs elsewhere; inevitably through higher rents.

It will have a drastic impact on many people and businesses and to announce it without consultation or clarity is wrong. We do not support the banning of letting agents charging fees to tenants. We believe fees should be open, transparent and reasonable. They represent legitimate costs to the business that need to be covered. Read our proposal...

Commenting after the Autumn Statement announcement

“A ban on letting agent fees is a draconian measure, and will have a profoundly negative impact on the rental market. It will be the fourth assault on the sector in just over a year, and do little to help cash poor renters save enough to get on the housing ladder. This decision is a crowd-pleaser, which will not help renters in the long-term. All of the implications need to be taken into account.”

David Cox, ARLA Propertymark Chief Executive

Economic Impact of the Proposed Ban on Letting Agents Fees

As part of our Tenant Fees campaign, we commissioned evidence on the likely economic impact of the ban from leading consultancy Capital Economics. The research shows that the residential lettings sector turns over around £4billion per year and employs some 58,000 workers. Fees charged to tenants generate around £700 million per year or approximately 20% of the industry's turnover.

Capital Economics predicts that in the event of an outright ban agents stand to lose £200 million in turnover and a staggering 3,000 jobs could be lost.

Read more

Boards

The Consultation

The Government announced on 23 November at the 2016 Autumn Statement that it would consult on introducing a ban on letting agent fees paid by tenants, to improve competition in the private rental market and give renters greater clarity and control over what they will pay.

The Ministry for Housing, Communities and Local Government have now published a summary of responses and its response to the consultation on banning letting fees paid by tenants in England.

ARLA Propertymark responded to the consultation. 

Read our consultation response

The Government have listened to our call and increased maximum security deposits from four to six weeks and are encouraged that it appears those tenants who wish to break their contract will have to cover the legitimate costs of finding a new tenant.     

What have we been doing for members?

Getting Members' Views Heard

After the announcement on 23 November 2016, ARLA Propertymark Chief Executive, David Cox spoke to the media to make sure members' point of view was being heard. On the day of the announcement, he held six national news interviews including BBC Radio 4’s Today programme and BBC 5 Live. We also wrote to the Chancellor and the Housing Minister to explain the importance of talking in person to discuss how the ban will impact the industry.

We are continuing to discuss the proposal to ban letting agent fees with Government Ministers and officials. We, along with many members, are also continuing to meet MPs to explain the effects that the ban will have on the industry.

Gathering evidence

Following the announcement, we asked for members feedback. Since then we have received hundreds of emails from members giving their views on how the ban will affect the industry.

Then as part of our monthly survey, we gathered actual facts and figures from members to reinforce the anecdotal evidence we have received by email. To read a copy of our findings please check our housing research page.   

This evidence is crucial to forming a comprehensive argument for the industry.

Giving Evidence

The Communities and Local Government Committee (made up of MPs in the House of Commons) opened an inquiry in November 2017 into the Draft Tenant Fees Bill. The Committee is conducting pre-legislative scrutiny of the Government's proposals.

On 29 January 2018, ARLA Propertymark Chief Executive, David Cox gave oral evidence in a Communities and Local Government Committee meeting discussing the Private Rented Sector and the Draft Tenant Fees Bill