A draft bill that will ban letting agent fees in England has been outlined in a bid to make the rental market ‘fairer’.
Communities secretary Sajid Javid introduced the proposed legislation, which ensures that all letting fees except rent, a security deposit, a holding deposit and tenant default fees will be banned, to Parliament today.
The draft bill also promises to cap holding deposits at one weeks’ rent while tenancy deposits will be limited to six weeks’ rent.
Tenants should no longer be hit by surprise fees they may struggle to afford
Once the legislation comes into force, the ban will be enforced by Trading Standards with a punishment for a civil breach set at a fine of up to £5,000, with a further offence within five years earning a £30,000 wrap or a banning order under section 14 of the Housing and Planning Act 2016.
Any tenants who have been charged banned fees will also be able to recover the lost money via the county court system.
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To ensure that the ban is enforced, Whitehall is planning to appoint a lead authority in the lettings sector.
The draft bill, which was first proposed in July’s Queen’s Speech following a three-month consultation period, saw more than 4,700 responses from both individual tenants and housing sector bodies.
And the responses were heavily in favour of the ban with more than nine out of 10 tenants backing it.
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A further seven out of 10 responders also suggested that letting agent fees had stopped them from being able to move into a new property.
Communities Secretary Javid, who called for a Housing First approach to Britain’s housing market crisis at a special reception with Big Issue vendors in the summer, said: “This government is determined to make sure the housing market works for everyone. Tenants should no longer be hit by surprise fees they may struggle to afford and should only be required to pay their rent alongside a refundable deposit.
“We’re delivering on our promise to ban letting agent fees, alongside other measures to make renting fairer and increase protection for renters.”
However, the news has not been met with acclaim from everyone.
The National Landlords’ Association (NLA) has questioned the need for a cap since the summer announcement of the bill but praised the government for extending the deposit cap from four to six weeks.
Chris Norris, head of policy at the NLA, said: “At the time the NLA argued that an arbitrary cap of four weeks’ rent would be damaging to certain groups of prospective tenants and could have the counter-productive effect of making it harder for some households to secure suitable accommodation in the sector.
“Since the plans were announced we have been lobbying the government and we met with the Minister of State for Housing and Planning, Alok Sharma MP, in September in order to press him to rethink his plans for a cap; taking into account the needs of those living and working in the private rented sector.
“The NLA is happy that the government has listened to the evidence we presented on behalf of our members. Whilst we remain disappointed that the government continues to believe a cap is necessary, extending it to six weeks’ rent will reduce those households and landlords disadvantaged by the policy significantly.”