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Tenant Fees Bill reaches the House of Lords

Monday 17 September 2018

The controversial Bill that will ban most charges set by landlords and letting agents to tenants in England has started its journey through the upper chamber.

The Tenant Fees Bill was introduced into Parliament in May of this year, and it has since completed its stages in the House of Commons and moved swiftly into the Lords for further scrutiny. The First Reading in the Lords was on 6 September, with the next stage taking place on 10 October.

On 5 September the Bill passed through the Report Stage and Third Reading in the House of Commons, minor amendments that passed were tabled by the Secretary of State for Communities and Local Government, James Brokenshire MP.

Over the Summer, ARLA Propertymark worked with the MP for Shrewsbury and Atcham, Daniel Kawczynski, on an amendment that would allow letting agents to charge costs of up to £300 when incurred for starting or renewing a tenancy as a ‘permitted payment’. Unfortunately, the amendment was not voted on, and therefore did not pass.

Shadow Housing Minister, Melanie Onn MP, tabled further amendments which had they have passed, landlords and agents would have been slapped with a £30,000 fine for their first offence, and an unlimited fine for any further offences. Another amendment tabled by the Labour MP would have removed default fees as a permitted payment, replacing them with payment of agent and landlord expenses where there was a ‘clear cost due to tenant fault’. Both of these amendments were voted down, and the Bill passed through the Commons without opposition.

Following the Bill’s passage in the Commons, David Cox, Chief Executive of ARLA Propertymark said:

“We’re disappointed but unsurprised the Tenant Fees Bill has passed the House of Commons. Over the summer, we worked with Daniel Kawczynski MP on his amendment to allow agents to charge up to £300. Although the amendment was unsuccessful, this shows that members involved in ARLA Propertymark’s campaign have helped MPs understand the unintended consequences of the tenant fee ban; with some MPs listening to the legitimate concerns of the industry. As the Bill moves into the House of Lords we will continue working to ensure Parliamentarians understand the impact the ban will have on the whole private rented sector.”

So, what’s changed?

The amendments passed by Brokenshire clarified the intentions of the Bill. Minor amendments have been made to bring the legislation for landlords in line with letting agents. Here’s some of the most significant changes:  

  • The Bill now dictates that default payments will not be a permitted payment if the nature of the fee is not recorded in the tenancy agreement.
  • A tenant’s consent will be required to dictate whether their holding deposit or a prohibited payment will be repaid through deduction of rent or on the return of the tenancy deposit.
  • Landlords and agents will be required to pay back a prohibited payment within a period of 7-14 days, where previously they had 28 days.
  • To charge a default fee, the landlord or agent must provide proof of reasonable costs incurred, such as a receipt for having a new key cut.
  • Relocation agents will be allowed to charge a tenant where they have only sourced the property for them and are not working on behalf of the landlord.

Until the Bill comes into force, fees charged by letting agents are completely lawful as long as agents clearly display them both in branches and on their websites.

What are we doing to help you?

Our dedicated The Ban on Letting Agent Fees page in our Lobbying section tells you exactly what we have done and are continuing to do in communicating the interest of our members in both England and Wales.

Members can read more about what exactly is a ‘permitted payment’ in our comprehensive Tenant Fees Bill Fact Sheet.

Whilst the Tenant Fees Bill only affects letting agents and landlords in England, we have also created a Fact Sheet for our Welsh members concerning the Renting Homes (Fees etc.) (Wales) Bill, which was introduced to the Welsh Government in June of this year.