What letting fees are banned?
If they break the rules again. Landlords or brokers who are found to be charging illegal fees after today can be fined up to £5,000 for a first offense. If they break the rules again within five years, they face an unlimited fine. If your tenancy includes a term during which you have to pay a prohibited fee, this period is not binding on you.
But on June 1, a new law came into force in England. It made charging upfront fees for services such as viewings, credit checks, references, and setting up a lease illegal. In the middle of last year, most fees for tenants were banned. This applies to most private leases, including insured short-term leases, student housing, and tenant contracts — and the tenant fee ban applies to all fees charged to tenants or their guarantors.
According to the government, banning agency fees will result in greater transparency for tenants, make the move more affordable, and allow landlords to “shop” to find the best rental agent. Tenant fees account for around 19% of a landlord’s income, with some agencies reporting up to 30% of their annual income from tenant fees alone. One suggested outcome of the ban is that letting agents are starting to use inventory services “in-house.” The government estimates it could cost landlords up to £83 million and letting agents £157 million in the first year.
It included news that the Welsh government will take legislative action to combat the fees that tenants in the private rental sector are charged. If they break the rules more than once, they could be prosecuted by the council and banned from renting out real estate in the future. The ban applies to insured short tenants, student rentals and tenants who live with a private landlord. As a letting agent, it’s not only important to stay up to date on the fees that are allowed to avoid potential deposit disputes, but it can also save you costly legal penalties.
The tasks of rental agents include procuring tenants, collecting rent and communicating between tenants and landlords. While this change is great news for tenants, landlords, and landlords, this change requires careful planning. For savvy landlords, this is the time to look for better alternatives to your rental agent. While they accepted that many letting agents provide a legitimate and valuable service, the issue of varying management fees needed to be addressed from agency to agency.
Previously, landlords were legally allowed to charge for administrative, tenant reference checks, and other costs. There’s no limit to how much rent a landlord can charge upfront, but it’s illegal to disguise additional fees by calling it rent in advance. Private tenants in England, including families with dependent children, paid £13 million in rent fees a month, says Citizens Advice.