With the Tenant Fees Bill introduced to parliament today, the proposed ban on letting fees are expected to come into play in 2019. During its first year, according to government figures the letting agent fee ban will save tenants a total of £240m,as it cracks down on unexpected letting fees and ensures deposits do not surpass six weeks’ rent to prevent renters exploitation.
The bill will put a restriction on the fees charged to tenants by letting agents. However, a security deposit can still be held but for a maximum of six weeks rent. Furthermore, “holding deposits” will be capped at one week’s rent with the bill laying out requirements for landlords and agents to return these deposits. In addition, a maximum of £50 can be charged to change the terms of a tenancy agreement.
The bill is expected to increase competition between agents and landlords to push costs down and increase service quality for tenants & penalties for breaching of the bill include fines of up to £5000 and criminal charges for a second offence within five years.
Despite a saving for tenants, an impact assessment report published by the government revealed that landlords can expect a loss of £82.9m whilst agents could lose £157.1m, amounting to a huge strain on the letting agents business model.
Loss of revenue and increased strain may in the future see an increased fee for landlords by letting agents in order to replace losses.
Along with the buy to let tax changes, landlords are already being coerced to tighten budgets, with some even selling parts of their portfolios.
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