The Housing, Communities and Local Government Committee have today published their conclusions from scrutinizing the Draft Tenant Fees Bill.
The Bill proposes to ban many of the fees currently paid by tenants, except for rent, default fees, security deposits and holding deposits of up to week. The Committee have largely favoured the proposals, and have further proposed that the maximum security deposit chargeable should be reduced from the current period of six weeks’ worth of rent to five weeks.
The draft Bill will save tenants hundreds of pounds, but estate agents have expressed concern that this will see rents increase, and many in the industry have called for more clarity on what would be considered a reasonable ‘default fee’.
The Committee’s conclusion was that the risk of increases was low, based on recent experience in Scotland and they believe the proposals with improve competition among letting agents. The committee also concluded that even if rents increase, this would be preferable for tenants as it spreads costs over a tenancy and still reduces the up-front cost of renting in the private rented sector.
The Committee also acknowledged that there is room for improvement in the draft legislation, and recommended offering clearer guidance to tenants, landlords and letting agents on what constitutes a reasonable default fee and, guidance to tenants about how to challenge the inclusion of such fees in tenancy contracts.
MP Clive Betts. The Chair of the Housing, Communities and Local Government Committee stated:
“With more and more people living in the private rented sector, this legislation has the potential to make a difference to millions of people by cracking down on unfair fees and saving tenants hundreds of pounds.
“We believe however that there are clear improvements that could be made to the Bill that would ensure it has a much better chance of delivering on its aim of making renting fairer and easier.
“Moving home is already an expensive time and many people struggle to find large sums of money at the start of their tenancies to put down as a deposit.
“Lowering the cap from six weeks’ worth of rent to five will help make the private rented sector much more affordable, while also keeping protection for landlords from rogue tenants.
David Cox, Chief Executive of ARLA Propertymark commented:
“We are very pleased to see that the Committee has listened to our concerns about the draft Tenant Fees Bill. We welcome the Government’s intention to clarify the legislation and permit charges related to a change of sharer when requested by a tenant and, that they have heeded our concerns regarding alternatives to traditional security deposits. We also are pleased that they will exempt Green Deal payments.
“However, while it is positive that the Bill will be clarified to reflect that holding deposits can be paid to letting agents as well as landlords, not allowing agents to retain the holding deposit when a tenant fails the referencing check is both extremely unwise and very misguided. This will result in agents only selecting the very best tenants to avoid the possibility of incurring costs through tenants failing referencing. Ultimately, this will reduce the availability of property for vulnerable tenants and families. The very people that the Government are trying to help most with this Bill are those who stand to lose the most.”
Gareth John, Managing Director of Estate Agent Software, AgentPro, added:
“We welcome the conclusions of the report today, but they are largely those the industry has predicted. We now await the publication of the final bill – no matter what happens, AgentPro will make changes to help our agents manage the new process, whatever that eventually transpires to be.”