The Ban on Tenant Fees - England

On 12 February 2019, the Tenant Fees Act was passed into law. Announced in the Autumn Statement on 23 November 2016, the ban on tenant fees was introduced to Parliament in May 2018 as the Tenant Fees Bill.

In January, the Housing Minister in the House of Lords, Lord Bourne of Aberystwyth made a statement revealing that from 1 June 2019, all new and renewed tenancies will come under the scope of the new ban. All existing tenancies will be brought under the new rules from 1 June 2020.

“Implementation is, of course, subject to parliamentary timetables, and amendments we have made need to be considered in the other place. We also need to allow a period of time following Royal Assent to enable agents and landlords to become compliant with the new legislation. We, therefore, 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.”

Lord Bourne of Aberystwyth, Tenant Fees Bill, Third Reading House of Lords
15 January 2019

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:

  • Tenancy 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 amount that can be charged for a change to a tenancy will be capped at £50 unless the landlord demonstrates that greater costs were incurred.
  • The Consumer Rights Act 2015 is amended to specify that the letting agent transparency requirements should apply to third-party websites.

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.
  • 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).

A breach of the fees ban will be a civil offence with a financial penalty of up to £5,000.

toolkit

Tenant Fees Act Toolkit

The Tenant Fees Act comes into force on 1 June 2019. It is a complex piece of legislation. ARLA Propertymark’s Campaign Toolkit of resources will not only help you understand the ban but also help your businesses comply with the legislation. The resources range for a series of document templates, case studies, videos through to a  series of events.

View the toolkit

Our Position

Letting agents deliver a hugely valuable service and fees cover the costs of ensuring a tenant’s home is safe, legally compliant and professionally managed.

ARLA Propertymark believes fees should be open, transparent and reasonable. They represent legitimate costs to the business that need to be covered and consequently, we do not support a full ban on letting agent’s fees to tenants.

We are concerned that these costs will be passed on to landlords, who will need to recoup the costs elsewhere; inevitably through higher rents.

Economic Impact of the Proposed Ban on Letting Agents Fees

Our independent research commissioned by Capital Economics predicts that as a result of a full ban on fees tenants will pay an increased rent of £103 per year.

Residential lettings activity provides 58,000 jobs, which generate employee taxes in the order of £400 million for the Exchequer each year

Fees charged to tenants generate around £700 million per year or approximately 20% of the industry's turnover.

Read the full report

Representing Members

In May 2017, ARLA Propertymark responded to the Government’s consultation on the Banning of Letting Agent Fees paid by Tenants.

Read the response

In December 2017, ARLA Propertymark responded to the Housing, Communities and Local Government Committee inquiry into the Draft Tenant Fees Bill.

Read the response

On 29 January 2018, ARLA Propertymark Chief Executive, David Cox gave oral evidence to the Committee, discussing the Private Rented Sector and the Draft Tenant Fees Bill.

Watch the video