Renters have been charged over the odds by letting agencies for years to cover all sorts of costs, such as; administration, credit checks, holding deposits or tenancy renewals. When all of these fees are added together, this can amount to hundreds of pounds, leaving some renters having to borrow money in order to pay for them.
This new piece of legislation will enforce the ban on letting agency fees. It will introduce two major changes to the way that renting works in England.
These changes will be;
Since this legislation has been introduced, there have been concerns over letting agencies raising and adding new default fees in order to make up their losses.
However, after debates in parliament, it was decided that letting agencies would be limited to only charging default fees for late rent payments or lost keys.
It will be up to the local authorities to ensure that letting agencies and landlords comply with the new piece of legislation. Any one who is found to have made a breach could be fined up to £5,000 for a first offence and could be criminally convicted if it happens more than once.
In the first instance, the ban will online apply to new tenancies and tenancy renewals. After one year, from June 2020, the ban will apply to all pre-existing tenancies and will state that all charge fees will become ineffective.
If a letting agent or landlord takes a payment after the date, they will be in breach of the legislation unless that return the money within 28 days.
There have been arguments from letting agencies that this ban will cause huge monetary losses for letting agencies which could result in later job losses, business closures and poor service to potential customers. However, there is no evidence, as of yet, on exactly how they will be affected or whether there will be anything put in place to help them through this transition period.
There has been no definite answer to this, but one way that agencies may seek to make up their losses will be to raise the fees they charge to landlords for their services. So, landlords may stand to lose out a lot as they will be charged more by the letting agencies and won’t be able to charge tenants any fees at all, even if they manage the property themselves and don’t use an agency at all.
This new ban could see renters being saved hundreds of pounds in fees during the years to come. However, there is the concern that, because landlords will be charged more by letting agencies, they may raise the cost of rent in order to cover their additional losses. So, even though renters will save on fees, they may end up paying more in rent.
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Last updated: 31 January 2019 | © KIS Finance 2018 |