In short, yes. The government passed legislation on 1 June 2019 banning tenant fees for most private tenancies starting on or after that date. From 1 June 2020, it applied regardless of when the tenancy started. The ban covers assured short hold tenants, student lettings and lodgers living with a private landlord.
Tenant fees were already banned in Scotland, and the Welsh government has also banned fees.
In England, the ban will prevent agents or landlords charging a tenant any kind of fee including those for moving in, rental contract preparation or renewal, moving out, inventory preparation, tenant referencing and right-to-rent checks.
Agents and landlords who continue to ignore the new laws will face fines of up to £30,000.
For many years the government tried to drive down tenant fees by making agents advertise their rates and therefore getting them to compete with each other over the cost of their services. This, it was believed, would drive down the fees they charged. It was a nice idea in theory, but it failed to achieve what it was supposed to.
Average fee paid
In 2017 campaigning group Generation Rent revealed that tenants moving into a rented property paid on average £404 and that in extreme cases this could be £800 or more1.
Letting agents have been lobbying for a ‘fees cap’ rather than a ban, but the government dismissed this idea, saying it will be easier for tenants to understand how much it will cost to move home if the ban is total.
“The ban will make renting fairer and easier for tenants by allowing them to see upfront what a given property will cost them – the rent that is advertised will be what you are expected to pay, nothing more,” the draft bill says.
Tenants will still have to pay a deposit, but this is capped at a maximum of five weeks’ rent. Holding deposits are also going to be exempt from the ban, although they won’t be able to exceed one week’s rent.
Holding deposits
A holding deposit is a sum of money tenants’ pay to take a property off the market but, if they later pull out of the deal, they usually lose it. If they do rent the property, it’s taken off the main deposit they pay the landlord or agent at the beginning of the tenancy.
Read our guide to rental deposits
Default fees
Landlords will also be able to charge tenants a 'default' fee if they don’t pay their rent on time or breach other conditions of the contract - for example if they lose their door keys and want a replacement.
Fees added to the rent
But landlords and agents will not be able to get around the ban and recoup their ‘lost’ fees by adding them to the first month’s rent or increasing the rent in general.
The bill tackled this and makes it clear that a landlord or agent cannot increase the rent during the initial months of the tenancy, or over its entire length.
But this kind of sneakiness is going to be hard to prove; what’s the difference between adding fees to the rent and simple local market conditions pushing up the rent?
One thing's for sure. Overall its cost tenants less to move into a property since the law went live.
Sources
1https://www.generationrent.org/save_404_when_you_mo...
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Remember the information provided in this article is for information purposes only and should not be considered as advice.
