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Holyrood has voted yesterday (21 February 2019) to pass the Scottish Government’s Budget for the next financial year. Read More...

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Tenant Fees Act passes in to law

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England's Tenant Fees Bill analysis for report stage

Thursday 21 June 2018

On Wednesday 20 June the House of Commons released a briefing paper on the Tenant Fees Bill ahead of the report stage, which we expect to be announced shortly.

The 50 page report - Tenant Fees Bill 2017-19: analysis for Report Stageprovides background to the Bill, which will abolish most upfront fees for tenants in England and cap security deposits at the equivalent of six weeks' rent, including information on current practice in Scotland, Wales and Northern Ireland. It explains the Bill's provisions and summarises reactions from tenants, landlords and letting agents and also include issues raised by various groups including ARLA Propertymark during the Public Bill Committee oral evidence stage. The date for Report Stage is yet to be announced.

ARLA Propertymark are mentioned early on in the report when discussing reaction to the Bill, saying "Bodies such as the Association of Residential Letting Agents (ARLA)...while expressing support for wider regulation of letting/managing agents to drive up standards, do not support the abolition of letting agent fees. They argue that fees cover essential costs which must be met and that tenants' rents will increase because of the ban. There is also concern that the removal of this revenue stream will result in agency closures, job losses and less competition. There is doubt within the sector that landlords will accept significant fee increases and that service levels might decline."

"It is argued that capping security deposits at six weeks' rent could result in landlords/agents being less willing to accept 'riskier' tenants but this is preferred to the Select Committee's recommendation for a cap at five weeks' rent."

The situation in Scotland, Wales and Northern Ireland

In 2012 the Scottish Government clarified the law so that since 30 November 2012 all tenant charges, other than rent and a refundable deposit, have been illegal. In Northern Ireland the Department for Communities has said that a ban on letting agent fees will be introduced. The Renting Homes (Fees etc.) (Wales) Bill, which will introduce a ban on tenants' fees, was introduced into the National Assembly on 11 June 2018.

The proposal to ban upfront fees - A timeline of events

As part of the Autumn Statement 2016 the Conservative Government announced an intention to abolish letting agent fees. Consultation on this proposal opened on 7 April and closed on 2 June 2017. The Conservative Party's 2017 Manifesto said "we… will shortly ban letting agent fees".

During the Queen's Speech 2017, the Government announced an intention to bring forward a Draft Tenants' Fees Bill to tackle "unfair fees on tenants" and "make the private rental market more affordable and competitive".

November 2017 saw publication of Banning letting fees paid by tenants: government response and the Draft Tenant Fees Bill and explanatory notes. The draft Bill was subject to pre-legislative scrutiny by the Housing, Communities and Local Government Select Committee.

The Committee took written evidence and held five public evidence sessions in January and February 2018. The written and oral evidence submitted to the Committee can be found on the Committee's web pages.

The Committee's findings were published on 29 March 2018. Overall, the Committee expressed support for the draft Bill: “With increasing numbers of people living in the private rented sector, we support the aims of the draft Bill and broadly support the proposed legislation. We believe it has the potential to save tenants in the private rented sector hundreds of pounds as well as making the market more transparent.”

The Government's response to the Committee was published on 2 May 2018; on the same day, the Tenant Fees Bill 2017-19 received its First Reading in the House of Commons. The debate on Second Reading took place on 21 May 2018.

The Bill was considered in Public Bill Committee during five sittings between 5 and 12 June 2018. The first two sittings were taken up with the examination of witnesses on 5 and 7 June (morning). Although Opposition amendments were tabled, the Bill completed its Committee Stage without amendment.

At the time of writing, a date for the Report Stage has not yet been announced, but we will keep you updated as the Bill progresses.

To help you understand the Bill and what it means for you, we've produced a Tenant Fees Bill fact sheet which you can download from the members' area

Read the report