After years of waiting, England's Tenant Fees Ban is finally here. It means that letting agents and landlords won’t be able to charge extortionate fees when you move to a new home. Here are the top 6 things you need to know about the ban:
You read that right: before the ban on letting fees has even come into force (this Saturday, folks), letting agents are already flouting existing laws on fees. Since 2015 agents have been supposed to display details of the fees they charge tenants online, but we've found 21 that are not.
Local councils could be collecting £5000 in fines for these offences, so the fact that agents are still getting away with it does not fill us with confidence that the fees ban will be enforced effectively.
Last month’s announcement that the Government intends to abolish section 21 evictions and create open-ended tenancies rightly took the limelight, but alongside it was published the Government response to last summer’s longer tenancies consultation. As we all look ahead to the forthcoming reforms that will create a secure, open-ended tenancy, adjust legitimate grounds for eviction, and streamline the court process, it’s useful to dig back into the detail of the consultation responses to understand how tenants, landlords, and letting agents understand the barriers to and benefits of longer tenancies.
Here are some key take-aways from the consultation responses which should be borne in mind as the new open-ended tenancy and wider private rental market reforms are shaped.
You’ve probably heard of Airbnb. But you might not have heard of Flipkey, HomeAway, HomeStay or Hostmaker. The concept stays the same - property owners rent out their house or flat for ‘short-term lets’, also known as holiday homes. They can be a great solution for covering your rent or mortgage bills for a few weeks whilst you’re away or utilising that spare room in your home.
But the problem is that local communities are finding more and more entire properties becoming permanent holiday homes. It’s eating up the market of houses that families can call home, and pushing up local rents.
I’m currently looking for a new home. My flat is being sold and my current estate agents aren’t being as supportive as I hoped so I started casting my net wider - looking at properties with other agents.
I’d seen a house I really liked and was chatting through with the estate agent the next steps. That’s when I started to get suspicious: one estate agency said the ban on letting fees was “like Brexit” in that it was being continually pushed back and might not even happen. He told me I shouldn’t wait to sign after 1st June (when the ban comes into force) because the fees ban might not happen and by then I’d have missed out on some really great properties. I left that meeting feeling confused - was he right about the law?
I went to another agency who didn’t seem to know about the Tenant Fees Act at all and gave me the same advice “don’t wait for June 1st, the ban doesn’t exist”. Luckily, I’m not in a rush to move just yet but both agents ran and text me multiple times, pushing me to sign before June.
I was cautious, everyone I know who rents thought the ban was coming in on 1st June, but hearing two professionals deny it made me doubt myself.
So I did my research on the Parliament website and took a look at Generation Rent’s advice and I found out the ban is definitely coming into force on 1st June. It will mean that if you sign a contract after 1st June, your letting agent and landlord will only be able to take payments for:
- Security deposit – capped at 5 weeks rent
- Holding deposit – capped at 1 weeks rent
- Early termination payment
- Change of sharer fee (shouldn’t be more than £50)
- Charge for lost keys or security device
- Charge for interest on late rent payments
I’ve lost my faith in agents now. For someone to outright lie about a law they’re obliged to follow, in order to manipulate me into spending hundreds of fees, made me feel let down - house hunting has now become a chore and something I’m not excited about, purely based on how estate agents have made me feel, rather than based on the properties themselves.
The agents followed up with me, texting me 3 days in a row saying I could pay the fees over the phone as soon as I submitted an application. This also seemed kind of suspect, as usually, I’ve applied to properties then had to wait a few days for confirmation that I’m the selected tenant, at which point fees are paid to do referencing. I do wonder if they said I could pay as soon as I had applied, in order to ensure they get as many tenants into their properties before the ban comes in.
I’m so glad that I did my research - it’s likely that I saved myself £400 by not signing that contract - let alone all the future fees I could have been charged for.
If you’ve had an experience like mine then get in touch with Generation Rent. They are putting together a team of volunteers to mystery shop letting agents and make sure they are giving the right advice to tenants. I know not all letting agents are like this but we need to hold the bad ones to account.
To join the mystery shopping team at Generation Rent email email@example.com, or join the whatsapp group.
You can also report agents that are misbehaving here
*Samira is a false name to protect the identity of this renter.
We're very grateful to Which?, the consumer rights organisation, for their latest investigation into letting agents. A mystery-shopping exercise, targeting 20 agents around the country, revealed practices that potentially breach the law: from denying would-be tenants the opportunity to review terms and conditions before putting down money, to opaque fees.
This piece of work is particularly useful because it gives tenants an idea of what bad practice to watch out for (and challenge) the next time you're trying to find a new home. Here's what they found...
After the Government announced they will scrap section 21 'no fault' evictions and introduce open-ended tenancies, the End Unfair Evictions campaign coalition took a moment to celebrate. But the reality is that there is still much work to do. This sea change in tenancy law and renter rights will not happen straight away. First there will be a consultation (out 'shortly') on what the new open-ended tenancy model will look like, including legitimate possession grounds. Generation Rent will be talking to tenants, landlords and government to get the detail of the new tenancy right.
Once the consultation period closes, the government will have to confirm the design of the new tenancy and prepare a Bill to enact this in legislation. The earliest this legislation could be introduced into Parliament is likely Autumn. Although tenancy reform now has cross-party support, there’s the potential for this Bill to take some time to pass, especially given how much Parliamentary time Brexit needs. If the legislation is passed in 2020, it won’t be implemented immediately.
The Government will scrap section 21, ending ‘no fault’ evictions in England that have caused misery and hardship for millions of private renters and eroded our communities. This morning's announcement also said insecure fixed-term tenancies will go and a new, open-ended tenancy will be created.
“Deposit-free” schemes on the market can cost as much as £864 for a two year tenancy in non-refundable costs to tenants, new product analysis and cost comparison by Generation Rent shows. And if the landlord makes a claim for deductions at the end of the tenancy, that figure can rise much higher.
The ban on letting fees is coming – from 1 June, renters in England (including licensees and property guardians as well as tenants) will not have to pay fees for admin, references or inventory to move into a new home. Just the rent and refundable deposits.
This should have a huge impact – not only on renters’ finances, but on their relationship with the landlord and agent too. If the landlord isn’t fixing something or is asking for a higher rent, the tenant is in a stronger negotiating position because it is now cheaper for them to move out instead. Faced with the prospect of a tenantless property, the landlord is more likely to capitulate.
But letting agents are a crafty bunch – their ability to invent fees out of thin air is why we’ve got to this point. And many are willing to break the law – our research on lettingfees.co.uk found that 12% of agents weren’t publishing their fees, in breach of the Consumer Rights Act 2015.