As of June 1st 2019, Landlords and Letting agents will no longer be able to charge Letting and Administration fees to their tenants. The change in Law follows on from the ban in Scotland in 2012, however Letting fees still remain legal in Wales and Northern Ireland.
When the new legislation comes into force in June, the only costs that will be chargeable to the tenants are:
- Council Tax and Utilities i.e. Water, Electric, Gas etc
- A refundable deposit sometimes known as a bond which will be capped at 6 weeks rent
- Changes to the tenancy agreement capped at £50
- Early termination of the tenancy agreement
- Reasonable costs for things such as late payment of rent or lost keys
Should a Landlord or Letting agent be found to be charging any other fee, they could potentially face a £5000 fine. However, if they break these new regulations more than once, the fine they face can be unlimited.
Although Trading Standards will be enforcing the ban, Local Councils will also have the power to exercise these new rules alongside Trading Standards. The new legislation will also protect tenants by allowing them to claim back costs that have been charged to them illegally through a Tribunal.
It is thought, to cover the loss of the Admin and Letting fees, Landlords will simply increase the monthly rent charged to tenants. While the new legislation could potentially save tenants money in the short term, it will have a negative impact on Letting Agents and could potentially cost the industry thousands of jobs across England.
The new ban will only cover new tenancies for the first year of coming into force. However, after this date, the ban will also cover pre-existing tenancy agreements and any parts of the contract that relate to any fees outside of the new guidelines will be deemed as no longer in effect. Should a Landlord or Letting Agent charge an extra fee after this date, they will be in breach of the new legislation and have 28 days to return the fee to the tenant.
Despite this appearing to be an overall positive development, there is a risk that the additional fees will merely be redistributed in the form of increased rent and therefore tenants may not practically benefit from this change. Furthermore, Letting Agents may also increase the fees charged to Landlords for using their services and therefore deter Landlords from using Letting Agents as it would not be a financially viable option.
If you have any questions or would like to discuss this further, please do not hesitate to call our Conveyancing team today for friendly, helpful advice.
Sheffield - 0114 272 1884 or Doncaster - 01302 341 414