Letting fees ban confirmed in the Queen's Speech
In her speech at the State Opening of Parliament, the Queen announced the Tenants’ Fees Bill, which, if it is passed, will ban landlords and agents from requiring tenants to pay letting fees.
Fees allowed will be rent, a capped and refundable security deposit, a capped holding deposit which is also refundable, and tenant default fees.
Holding deposits are to be capped at no more than one week rent and security deposits at no more than one month rent.
Measures will be put in place to police the ban on extra letting fees, and will allow tenants to recover unlawfully charged fees.
The extra letting fees ban is proposed to apply only in England.
David Cox, Chief Executive of the Association of Residential Letting Agents (ARLA) Propertymark, said the bill would cause the loss of 4,000 jobs across the industry and could cost landlords in the UK as much as £300 million.
He added that this additional cost for landlords could mean they would increase rent to tenants. Given the bill was proposed in order to make renting a property less costly for tenants, its introduction could have the opposite effect.
However, in Scotland, where the ban on letting agents fees has been in place since 2012, there has been no significant rise in rental prices.
Richard Lambert, CEO at the National Landlords Association (NLA), said: "The decision to cap tenancy deposits at no more than one month’s rent smacks of a political gesture from a government desperate to court the voters who supported their opponents at the last general election.
"We estimate that around 40 per cent of deposits exceed one month’s rent. Whilst capping them may reduce the move-in costs for some, it will increase the temptation for others to view the deposit as the last month’s rent, leaving landlords out of pocket at the end of the tenancy if, for example, the property has been damaged.
"Some landlords use a higher deposit to give them the extra confidence they need when letting to higher risk tenants, so this could also have the unintended consequence of deterring them from offering their property to those likely to be struggling with affordability in the first place."
The Queen’s Speech also mentioned the need to establish new immigration powers concerning EEA nationals after the repeal of the European Communities Act as part of Brexit. This could involve changes to the Right to Rent scheme.