The draft bill on banning agency fees paid by tenants was published last week. The Draft Tenant Fees Bill has not been put before parliament yet thus is yet to be scrutinised by Parliament; changes are likely to occur to the draft bill before enforcement of the new law which is to be cited as the Tenant Fees Act 2017.
As the bill stands, section 1 and 2 of the bill prohibit landlords and lettings agents requiring any payment from a tenant for the granting, renewal and continuation’ of any tenancy or license. In Schedule 1 of the bill there are payments which are permitted and they include rent, tenancy deposit, holding deposits and a payment in the event that the tenant breaches any term of the tenancy or license where the agreement permits.
If there is a term or provision in the agreement which permits the landlord or letting agent to seek payments beyond those permitted that term or provision will not be enforceable. It is important to note that only that term or provision is not binding, the remaining terms and provisions of the agreement are not affected.
The initial civil penalty is up to £5,000 whilst repeated breaches are treated as criminal offences but with the ability to levy a civil penalty of up to £30,000 instead of prosecution.
Further, where trading standards officers find that fees have been paid in breach of this bill they will require landlords or agents to pay it back. While the bill permits holding deposits to be paid landlords or agents cannot simply retain this money. The holding deposit must be returned to the tenant unless it is applied towards a payment of rent or deposit. It will also need to be returned if the parties fail to enter into a tenancy or license.
– Landlords and lettings agents cannot attempt to avoid the ban by insisting that tenants pay a fee to any third party for the grant, renewal or continuation of any tenancy or license;
– Directors can be personally liable for these fines and penalties where a company commits the offence;
– Trading standards officers can apply interest to any repayment of prohibited fees or holding deposits; and
– Under section 12 of the bill, trading standards officers can assist and advise tenants that are due any repayments.
The deposit payable under any tenancy or license will be limited to 6 weeks. Where a deposit is taken for a period in excess of 6 weeks that excess period is prohibited and can see agents or landlords facing prosecution under this bill.
This bill also amendments the Consumer Rights Act 2015 in relation to the obligation on lettings agents to publicise their fees or provide a link to their fees on any third-party website, such as Rightmove and Zoopla. A breach of this obligation can see agents face more than one penalty where:
- the breach continues after the end of 28 days beginning with the day after that on which the final notice in respect of the previous penalty for the breach was sent, unless the letting agent appeals against that notice within that period, or
- if the letting agent appeals against that notice within that period, the breach continues after the end of 28 days beginning with the day after that on which the appeal is finally determined, withdrawn or abandoned.
Lettings agents will also need to become members of a client money protection scheme and provide the name of the scheme.
We will provide updates as the Bill progressing through Parliament which you will receive by subscribing to our mailing list.