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Tenants are rejoicing, as the Tenants Fees Act 2019 came into effect on 1st June. This means letting agents and landlords can no longer charge unjust fees for anything and everything, from changing a lightbulb to providing references.
Naturally letting agents are probably looking for ways to minimise their costs.
Indeed, as a sign that things might not improve, many letting agents have said they plan to discontinue the practice of providing post-tenancy references, as they can’t charge for this any longer.
Hidden Fees
Tenants pay, on average, around £400 in fees. These fees cover all kinds of things, from credit checks to renewing a tenancy agreement. There has long been criticism that many letting agents add on hidden fees for small things that cost them very little. Some landlords do the same, of course, but much of the criticism has been levelled at letting agents.
From 1st June, there is a list of items that letting agents and landlords can charge for. These include:
- Rent and utilities included in the tenancy
- A refundable deposit to reserve a property
- A refundable deposit – this is capped at six weeks, but this may be reduced to five weeks if an amendment to the Act passes through the House of Lords
- Changes to a tenancy agreement if requested by a tenant
- Early termination of a tenancy agreement
Letting agents and landlords can also charge if a tenant breaks the terms of their tenancy agreement, but costs must be “reasonable”, and evidence must be provided in writing. So, no more £150 bills for replacing a lightbulb!
A Negative Impact on the PRS
Campaigners are happy with the new Act, but landlord groups are concerned that it will have a negative impact on the private rental sector.
“Tenants are at risk of losing out on the chance to find a home because letting agents are doing everything they can to minimise workloads to cut down on costs,” says Richard Lambert from the National Landlord Association.
“While landlords who self-manage their portfolios will be covering many increases in costs, letting agents are looking at any way they can limit what they have to do on behalf of tenants, now that the costs cannot be directly recovered.”
Lambert believes that the new legislation makes it harder for tenants to move from one property to another. He says many landlords will question whether using letting agents is in their best interests if agents make it harder for tenants to move to a new property, such as refusing to provide references.
Stiff Penalties for Breaching the Act
It isn’t a one-way street, however. There are penalties for Letting Agents if they breach the terms of the legislation, with fines of up to £5,000 for offences. In addition, landlords can also be fined. If either party breaches the Act again within five years, they will face a criminal prosecution and unlimited fines.
