On the 1st June 2019 the Lettings Fee Ban comes into force and there will be a lot of changes that everyone needs to be aware of.
In short, no agent or landlord can charge tenants fees to set up, renew or end a tenancy. Although there are a couple of exceptions, which I will go into later.
At the moment tenants may be asked to pay:
- A referencing fee
- An admin set up fee
- A check in fee
- A check out fee
- A security deposit.
- An extra secruity deposit for pets
From the 1st of June, tenants will no longer be asked to pay any of the above mentioned fees. The security deposit will be capped at 5 weeks rent or 6 weeks if the annual rent exceeds £50,000. If tenants are charged a fee then the fee must be refunded and in worse case scenarios the tenancy may actually be void.
Holding deposits can only be a maximum of 1 weeks rent and must be refunded within 2 weeks.
What does this mean for tenants?
Tenants may be asked to supply their own valid referencing report, which can be obtained from one of the many referencing agencies out there. Your Landlord or Estate Agent may arrange the reference checks for you. If you are a tenant and concerned about missing out on good properties because of this, then speak to some referencing agencies and see if you can get one in place before you start your property search. Rightmove also offers a free service called Rightmove Passport which allows you to upload your referencing details, passport details. Rightmove passport even does a soft credit check which agents can use to potentially fast track your application, if they can see you are likely to pass.
What does this mean for landlords?
You will now be expected to cover the cost of both check ins and check outs. Depending on the lettings agent you use you may also find your management fees going up. Some agencies win over landlords with their low fees but then charge the tenant a small fortune to make up the difference. As this will no longer be allowed, the landlord will most likely see their management fee go up.
Landlords should speak to their agents who will have plans in place about this issue. Here at Rochills we have a contingency plan in place which will hopefully not affect our landlords or tenants.
What does this mean for the lettings industry?
Industry experts don’t think this ban is a good thing for tenants. The extra competition and not having the ability to hold properties, will definitely affect people who want to secure a home. As the cost of letting out their property is rising, along with additional tax increases, some landlords may just throw in the towel and sell up. This will mean there will be less properties available to rent. Tenants with pets who used to pay a small additional security deposit may also find themselves being turned away.
Our landlords and tenants shouldn’t notice much of a difference but if you do have any questions about the fee ban and how it will affect you, either call or email us.
01932 22 21 20
There will no doubt be more information on this and I will update you as it becomes available. Stay tuned and I’ll speak to you soon.