Letting fees ban – Amendments to the Tenant Fees Bill

Back in November 2017 the Department for Communities and Local Government, as it was then, published the Draft Tenant Fees Bill with the Tories committed to carrying out one of its key Manifesto pledges to ban letting fees in the private rented sector. The policy is undoubtedly aimed at winning support from young voters, many of whom rent and face the prospect of spending hundreds of pounds on letting fees.

Since the publication of the draft bill the DCLG has been re-branded as the Department for Housing, Communities and Local Government (DHCLG) and also has a new Secretary of State in James Brokenshire. The Bill remains a flagship domestic policy. On 3 May 2018, the Government produced its response to the DHCLG select committee report.

I have previously outlined the main features of the Tenant Fees Bill here, however, the government have accepted some of the select committee’s recommendations and have amended the Bill accordingly.

Perhaps the most significant amendment to the Bill is the bar on serving a Section 21 notice where a landlord (or agent) has unlawfully required the tenant to pay a “prohibited fee”. Under the amended Bill, a landlord will be prevented from serving a valid Section 21 notice until the fee has been re-paid to the tenant. This would bring the unlawful charging of tenancy fees in line with other obligations such as the Deregulation Act requirements for post October 2015 tenancies and tenancy deposit protection requirements.

Other key amendments to the Bill include:

• Allowing tenants to recover prohibited fees in the First-tier Tribunal rather than through the County Courts.
• If a landlord or agent commits a further breach within 5 years of the imposition of a financial penalty or conviction for a previous breach this will constitute a banning order offence.
• Landlords and agents are able to charge to vary a tenancy, for example, to change a name on the tenancy or to include bespoke clauses. Such fees will be capped at £50 unless the landlord can show that a greater fee was reasonable.
• An appeal against a financial penalty is to be a re-hearing of the enforcement authority’s decision and may take into account additional evidence of which the enforcement authority was unaware.

The Government rejected the select committee’s recommendation to cap tenancy deposits at 5 weeks rent, as opposed to 6 weeks. The government’s rationale behind rejecting this amendment is to ensure that a balance is struck between providing tenants with greater affordability and ensuring that landlords have adequate financial security for their asset. The Government stresses that the 6 weeks’ rent is an upper limit and not a guideline.

A date for the Bill’s Second Reading is yet to be announced but the government has already confirmed that it will commit legislative time to the Bill during this Parliament.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*