As soon as proposals for a ban on charging tenants in England directly for up-front administration costs were outlined in the Tenant Fees Bill last year, the media and some industry experts started predicting that rents would be pushed up as a result.
And, even though the Bill only recently became law - on 1st June, as the Tenant Fees Act 2019 - those predictions appear to already have become intentions.
A recent study by ARLA showed that 70% of the letting agents they surveyed were looking to increase their costs towards landlords. And, on 15th June, The Guardian reported that one London letting agent has wasted no time in charging landlords directly for credit and other checks and advised them to raise their rents by £20 a month to recoup this additional cost. Only time will tell whether these predictions will become a reality.
For in this economically uncertain time, the question is whether landlords will actually be able to raise rents. As experienced agents, we know we can only charge what tenants are not only willing but able to pay and we can’t simply increase rents because costs have gone up.
Other publications, including The Mirror, Metro and The Independent, have reported: “The tenant fee ban will save UK renters £192 million a year, new analysis [of government data] has found.” Indeed, if rents remain unchanged, it will represent a saving of £223 for the average tenant.
In other parts of the UK:
- in Scotland, it has been illegal to charge tenants any fees since 2012
- the Welsh Assembly has already passed legislation that will ban tenant fees from September
- Northern Ireland is the only country not to have any current plans to ban tenant fees.
Summary of Tenant Fees Act 2019
As of 1st June, landlords and letting agents are not able to charge tenants for anything other than:
- An administration fee when the tenant requests a change or early termination of a tenancy
- Utilities, communication services and Council Tax bills
- Payments arising from a default by the tenant, e.g. replacing a lost key.
Holding deposits are capped at one week’s rent and tenancy deposits capped at 5 weeks or 6 weeks’ rent if £50,000 or more a year. Fines for breaching the new law are up to £5,000 for a first offence, with an unlimited fine for reoffending within 5 years.
If you would like to discuss in more detail any of the points raised.