Victory for NLA as letting fees abolition bill published

by Gary Whittaker

The government has just published its long-awaited bill to abolish letting fees, with the proposed new law also suggesting that deposits should be limited to no more than six weeks' rent, rather than the originally proposed four. 

It is a change that the Nation Landlords' Association (NLA) campaigned for, and the government has accepted the organisation's case.

Designed to provide protection for tenants against excessive costs and also make it easier to find the funds for a rental deposit, the new legislation should save tenants around £240 million a year, the government estimates. 

The details were unveiled by James Brokenshire MP, the new secretary of state for housing, communities and local government. 

He said: "This government is determined to build a housing market fit for the future. Tenants across the country should not be stung by unexpected costs.

"That’s why we’re delivering our promise to ban letting fees, alongside other measures to make renting fairer and more transparent."

Around 4,700 replies were received to the consultation on the bill and perhaps the most notable result of the feedback is the change to the level of security deposit. 

The NLA protested that a four-week cap could leave landlords out of pocket, as it would cover the cost of the final month's rent for tenants who deliberately did not pay before leaving, but would mean no money left over to cover any extra costs such as damage to property - defeating one of the purposes of charging a deposit. 

This has been rectified by the extension of the cap to six weeks, to the NLA's delight. 

Ministry of Housing, Communities and Local Government spokesperson Becky Perk acknowledged the reasonableness of the NLA's point as she outlined this detail of the bill, saying: "We believe that a cap of six weeks’ rent will better support both landlords and tenants by giving landlords greater financial flexibility and security." 

Other features of the bill include holding deposits being capped at no more than one week's rent, limiting charges for a change to a tenant at £50 unless a landlord can demonstrate that the cost of doing this was higher, and stiffer penalties for breaching these rules. This would mean any landlord who has been banned from letting properties and breaches this can be fined £5,000. Any repeat offence within five years could lead to prosecution or a fine of up to £30,000.  

Councils will collect money from fines and use this to fund future enforcement of housing rules. 

Bans will be enforced by Trading Standards and there will also be a new legal avenue for tenants to recover any unlawfully charged fees via the first-tier tribunal. Until landlords have repaid any unlawfully charged fees, they will not be able to recover possession of their properties via section 21 of the Housing Act 1988. 

Further measures allow a lead enforcement agency to be established for the lettings sector and for the Consumer Rights Act 2015 to clarify that letting agency transparency requirements will also apply to property portals such as Rightmove and Zoopla.

The charging of fees other than rents and deposits will now be limited to instances where a tenant requests a change or early termination of tenancy, costs such as utilities, telephone and council tax, or default costs such as replacing a lost key. 

All this is highly detailed and specific, which in itself may be good news for landlords and agents as grey areas can be problematic, particularly when there is the potential for those falling foul of it to face severe sanctions. 

However, the fact remains that the costs of the new legislation will be substantial for landlords and agents.
 
According to an analysis by the Residential Landlords' Association, the ban on letting fees will cost landlords £82.9 million in the first year and agents £157.1 million.

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04-May-18General Lettings News