Government proposals, published on 1 November 2017, aim to save Tenants on average £327.00 when they take on a new rental agreement and ban Landlords and Letting Agents charging fees above rent. The only exception will be security deposits which will be capped at 6 weeks rent, holding deposits capped at one week’s rent and any Tenant default charges.
The Telegraph reports that Tenants are regularly charged hundreds of pounds by Letting Agents for services such as referencing and drafting an inventory. The ban also extends to Third Parties meaning Agents cannot require Tenants to pay another company to carry out an inventory for example. The penalties are an initial fine of £5,000.00 enforced by Trading Standards and a further breach within 5 years will be fined £30,000.00 or face prosecution.
The rules will also require Letting Agents to post details of their regulatory oversight and fee structure online using listing sites like Rightmove or Zoopla. The rules will also require all Letting Agents to be regulated.
A draft bill is to be published before it passes into law.
If Letting Agents are not charging Tenants then they will most likely charge the Landlord. The Landlord in turn will likely increase the rent to factor in the charges that can no longer be passed onto the Tenant via the Letting Agent. It is however a competitive market and it may be that some Letting Agents restructure themselves so as not to pass on any extra cost to the Landlord and remain competitive. This may in turn be bad news for Letting Agents staff if costs have to be cut.
Further information will be provided once the draft bill is approved.