Tenant Fees Ban: What Landlords Need to Know

The Government has published a Draft Bill with plans to make big changes to how landlords can let properties in England. At the centre of the plans is a ban on tenant fees.

If the bill gets enacted, this means that it would become illegal to charge tenants for referencing, inventories, and any other cost you can think of.

Here’s everything a landlord needs to know about the Draft Tenant Fees Bill.

Summary of Tenant Fee Ban

  • Limit tenancy deposits to six weeks’ rent
  • Limit holding deposits to one week’s rent
  • Ban any other fees (except contractual default penalties)
  • Fines of £5,000 for first offence (civil)
  • Fines of £30,000 for second offence (criminal)

 

What’s New in the Draft Bill?

Here are the key new rules contained in the Draft Bill.

1. A Ban on All Fees

Landlords – or their agents – will no longer be allowed to charge tenants for anything except: the rent, the tenancy deposit and a holding deposit (more on these below).

This means you will no longer be allowed to ask tenants to cover the cost of their own referencing. This is going to have some big consequences that we’ll be writing about very soon! You also won’t be able to charge check-in, inventory or admin fees.

2. Some ‘Defaults’ Are Exempt

You will still be able to charge ‘defaults’ once the tenancy is set up. These are things like fees to replace lost keys and fines for late rent-payment.

They will need to be included in the tenancy agreement for you to be able to charge them, and previous rules about fair clauses will still apply.

3. Limits on Tenancy Deposits

Tenancy deposits, also called security deposits, are to be limited to six weeks’ rent.

In practice, deposits have always been kept below two month’s rent due to the fear of the tenancy becoming a premium tenancy. This new rule will mean you can’t ask the tenant for a deposit larger than six times the weekly rent of the property.

4. Limits on Holding Deposits

Likewise, holding deposits will be limited to one week’s rent.

This is a big change, since most holding deposits are currently much more than a week’s rent. An OpenRent poll recently found that 47% of tenants have paid a holding deposit of over £750 – much more than the average weekly rent for a UK property.

5. New Rules on Holding Deposits

The Draft Bill includes new rules about how holding deposits must be treated.

The holding deposit must be returned to the tenant: either in payment back to the tenant, or being put towards the first rental payment, or the security deposit.

There are some exceptions. In these cases the landlord can keep the holding deposits:

  • The tenant withdraws
  • The tenant doesn’t take all reasonable steps to enter the tenancy
  • The tenant fails a right to rent check
  • The tenant provides misleading information which materially affects their suitability to rent the property

If that last clause sounds a little vague to you, then you’re not alone. We’re hoping that this will be tightened up in the final version of the bill.

What Are the Penalties to Landlords Who Charge Tenant Fees?

Landlord (or agents) who charge illegal fees will face paying huge fines.

The first offence would be a civil offence, with a fine of £5,000.

If the offence is repeated within five years, there would be either a criminal offence or a fine of £30,000.

There are also plans to help tenants recoup any illegal fees they paid from the landlord (or agent). Local Trading Standards organisations will enforce the ban.

Remember: It’s Just a Draft Bill

Although the Government seem set on banning fees and restricting the size of deposits, the Bill is currently only in the Draft phase. The details could still change.

There will now be a period of scrutiny and feedback and the bill will be revised. When that happens, we’ll be back to keep you up to date with all developments.

Summary

  • Limit tenancy deposits to six weeks’ rent
  • Limit holding deposits to one week’s rent
  • Ban any other fees (except contractual default penalties)
  • Fines of £5,000 for first offence (civil)
  • Fines of £30,000 for second offence (criminal)

You can read the whole Draft Bill here.

23 Replies to “Tenant Fees Ban: What Landlords Need to Know”

  1. Its about time the fees charged are a scandal .many seeking accomodation have enough trouble getting the deposit as it is

  2. Its about time i just lost £650 for referencing and agents fees for a property wanted to rent but my landlord regused to give reference on me just because he was on abroad since when did Northern Ireland became out of this world.
    I have no rental arrears and am still the one that lost.
    Landlords should be referenced too just as tenants are.

    1. As a landlord. It can take me months to get you out of my property when you decide to not pay rent. Keep making idiotic demands. Start looking for a tent

    2. As a private landlord, it never ceases to amaze me, the level of fees that prospective tenants are expected to pay. If a landlord employs an agent to source tenants and manage a property, then this is a contractual agreement between the landlord and the agent. It is not fair to expect the tenant to bear additional cost if the landlord chooses to contract out property advertising, vetting of tenants, rent collection and maintenance etc. I do think, however, that a credit reference check is necessary in order to establish tenants ability to pay and it would not seem unreasonable for a landlord to facilitate this, charging for the service at cost.

    3. That is very unfair and I would think challengable. I would argue it with the agent and take the matter to the ombudsman if necessary.

    4. This is awful and as a landlord I totally agree with this. I do think tenants should pay for their own references but they should do this once in a set period.
      Landlords should be registered and vetted. They should also be crossed checked against inland revenue to make sure they pay tax on the income. The gov know there are many that don’t and do nothing about it.

  3. I hope this ban actually does go through. I paid £425 +£425 +£215 rent for 1month +a month & half deposit + £250 which included references and drawing up contracts and after 6months they wanted £150 to extend my tenancy for another 6 months. This has got to stop. It the only way many can get a home .

  4. I really hope this Bill passes!
    It’s about time something is done about these horrendous fees landlords and agents are charging for references they don’t really check.

  5. I hope n.reland gets this as it’s an outrage you have to find over a thousand pounds before you get the house which people can’t afford ridiculous what they look for off people

  6. It should endorse straight away. Tenants are not just paying for referencing and admin fee but they are also paying mortgage for someone else and making them richest from rich.

  7. It’s about time. But this must be fast forwarded into it being LAW A.S.A.P. They also must must stop agencies from being allowed to not provide the landlords phone number for in cases of emergency. I had a flood from a burst pipe 00:20 . Yet the estate agents,’Property Solutions seem to think that an ex employee from six months back still being used in their emergency email address is adequate. And any email address is still not acceptable. I had water gushing and my landlord is now saying he’ll only pay half because I didn’t email the old email address. And now they’re also saying that when I turned the stop cock off after finally managed to figur out where the stop cock was and turned it off, that it was no longer an emergency! I was still paddling in water . I am disabled living alone. My only contact was the estate agents email address with an old member of staff who’d left months and months ago. This is not good enough. I’m currently in dispute about it as it happened last weekend on the 28th November 2017.

  8. It’s ridiculous the amount esate agents charge tenants. £240 to set an agreement up seriously one click of a printer does not cost that. £120 to renew a tenancy. How can open rent dona credit check for £20 pp and estate agents charge £100 upwards pp tenants need this new bill as there sick of getting ripped off.

  9. I don’t see why charging for an inventory is a scandal. We charge our Landlords for the check in and the tenant for the check out (both at cost might I add). What’s not fair about that given it s in both parties interest to have one. We charge referencing at cost and dont see why that would be unfair to pass on. I think the problems stem from the large high street agents that rip people off. Being a home based agency we can keep our costs right down and pass on what we deem to be fair costs…(we currently only charge for referencing and check out report for the past 5 years).

  10. Personally I don’t feel it is fair to ban fees outright, rather that they should be limited to a reasonable amount, such as £50. Otherwise I think there is a very high risk that many tenants will simply apply for multiple properties, messing landlords and agents about. Those costs will ultimately come back on all tenants as increased rent.

  11. About time my sister applied for a private rent and didn’t get it lost over £200 then needed to find the same amount again for next property its a rip off. Ive been lucky with mine he wavered the fees as I was in a right dump moved twice since with same landlord he’s the best

  12. I’m a landlord and don’t charge any fees except £30 to do a reference check. I’ve lost money on tenants who have not taken up a tenancy and cost 3-4 weeks of lost rent in the process. Plus tenants who have not treated my rentals well even though they are well maintained throughout.

    At the very least now I will be asking potential tenants to submit all income information before I payout for a reference check. ps. I don’t employ agents to manage my properties so perhaps I’m one of the few…

  13. i have just paid £480 holding fee. The agents are charging me £300 of that for getting references. All they did was ring my employer for that 300. In total with first months rent and deposit I will have had to pay out just under £2000.00 to move in to a property. Its no wonder people are homeless.

  14. I’m a private landlady and my tenants just paid £20 ref fee each via Open Rent. Deposit is protected in DPS scheme, it’s their money not mine. I got new tenants in the day after my old ones moved out. I really hope these laws come in, from my point of view if I have to pay to reference them that’s a small price to stop these rip off agents. Lets hope it puts the parasites out of business.

  15. About time, wer’re just looking to move due to work and the agents fees are just 7nder £2,000 by the time you take fees, reference checking etc, last property we rented they charged £400 for inventory which we had no choice over and we never even got a copy. They also demanded 3 months rent as we had a pet. It’s extortionist and lacks control and competition. I hope this goes through quickly. I understand agents need to cover their costs but they do charge a lot in commission on rentals so it should make it a more competitive market.

  16. Im about to sign with a private landlady and she wants to charge me £150 admin fee. Has this draft bill been passed? she says its for referencing, paperwork and certificates and inventory.

    1. No – unfortunately the Bill is still in the draft phase, so we’re a long way from a vote on a final bill, and even further away from a ban being enforced in England & Wales.

  17. And DO check that the fees charged by agents ARE displayed on their website. They have to show each fee, including VAT and what it is for. My UNI student daughter received an e-mail requesting £250 for “fees” – no breakdown at all. On checking their website (Clifftons in Bournemouth) I find the Student Referencing fee shows as only £180 (incl VAT) …….apparantly the website hadn’t been updated (hmmmmm…) so they would “hold” to the website price and I only need to pay £180 – which is still iniquitous considering you can do your own check Free of charge!
    How many students have overpaid these fees, I wonder?
    This bill can’t come in quick enough!!

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