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The Government Introduces Its Draft Tenant Fees Bill to Parliament

Posted by Richard Ward in ,

Image courtesy of Flickr, Creative Commons

The Government has introduced its draft tenant fee bill to Parliament as it looks to end upfront charges to tenants.

The proposals were included in the Queen's Speech on June 21 and are set to go before parliament today.

Under the legislation, the Government proposes to introduce provisions to ban landlords and their agents in England from (as a condition of, or of making arrangements for, the grant, renewal or continuance of a tenancy):

1. requiring tenants and licensees in the private rented sector to pay fees or other charges on top of the rent, with the exception of a capped refundable security deposit, a capped refundable holding deposit and tenant default fees (such as replacing a lost key);

2. requiring tenants and licensees in the private rented sector to secure and pay for services from any third party or to make a loan.

The bill will seek to cap tenancy deposits at no more than six weeks' rent and holding deposits at no more than one weeks' rent, as well as outline the requirements on landlords and agents to return holding deposits to tenants.

The proposed ban will be enforced by local authorities (Trading Standards), with an initial breach carrying a civil penalty of £5,000. Subsequent breaches within 5 years would be a criminal offence, but carry an alternative penalty to prosecution of £30,000.

The bill will propose a lead enforcement authority to provide oversight, guidance and support with the enforcement of requirements on letting agents. This includes the ban on letting fees and related provisions, the requirement to be a member of a redress scheme, the transparency requirements of the Consumer Rights Act 2015 as 6 they apply to letting agents in England, and the forthcoming requirements to be a member of a client money protection scheme under the Housing and Planning Act 2016.

In order to support the implementation of the bill and to "better protect consumers in the lettings sector", the government will require all agents to be regulated in order to practice. This will result in agents being required to satisfy minimum training requirements, abide by an industry code of conduct and demonstrate compliance with existing legal requirements.

It's now up to the Department for Communities and Local Government to work with the sector to shape the wider regulatory framework, with further details being provided in due course. However it's understood the ban will only apply to tenancy agreements and licenses entered into after any legislation comes into force.