The Tenants Fees Act received Royal Assent on 12 February this year after progressing through Parliament since its introduction as a Draft Bill in November 2017.
One of the changes will be a ban on letting agent fees to tenants, who will only be charged for rent, deposit, and defaults under their contracts. Significantly, landlords and agents will be banned from charging for inventories and referencing. The fee to change a tenancy will also be capped at £50.
Although housing groups have broadly welcomed the changes, pressure groups within the letting industry claim that the new legislation could mean redundancies, while others are concerned losses can only be recouped by increasing rents.
One of the issues landlords may wish to address immediately is how they go about taking inventories. They can save time and money by using property inventory software. But which businesses would use property inventory software? Any property companies.
Such property inventory software has proved increasingly popular with landlords since its first introduction and given that the service will no longer attract fees it could prove an essential investment.
The new Act also provides for a series of new fines applicable where the Act’s regulations are breached.
One of the main provisions in the Act changes the way deposits are dealt with. Tenants’ deposits will be limited to a sum which reflects six weeks’ rent and holding deposits will not be allowed to exceed one week’s rental income.
Deposits will still have to be retained in an approved tenancy deposit scheme introduced in 2007. There are, however, circumstances in which a deposit can be retained by the landlord. These are if the tenant withdraws or does not take all reasonable steps to enter into the agreement, fails to pass the Right to Rent test or if they provide misleading information.
The penalties for breaches of the Act, introduced by the new regulations, are strict. The first offense is treated as a civil violation attracting penalties of up to £5,000. If a violation is repeated within a five-year period, the penalty could reach £30,000 or be treated as a criminal offense.
The new Act does allow agents to charge for some services. These include early termination of the rental agreement at the tenant’s request, covering the costs incurred.