Mon 04 Feb 2019
On 16th January 2019, when all eyes were on the latest Brexit vote, the much-debated Tenant Fees Bill quietly received Royal Assent.
This means that from 1st June 2019 landlords and letting agents will no longer be able to charge fees – historically paid by tenants - to set up or renew a tenancy in the private rented sector (including referencing costs).
There will also be a cap on the amount of refundable security deposit a tenant would be required to pay to the value of five weeks’ rent (formerly 6 weeks) as well as a 1 week cap on the holding deposit a tenant will be required to put down to secure a property.
The government believes that the Bill will make renting properties in England fairer and more affordable for tenants by reducing the costs at the outset of a tenancy, but the fees ban will undoubtedly have a multitude of effects on landlords.
Government believes that landlords are ultimately responsible for the cost of managing all aspects of the tenancy, rather than extra fees chargeable to tenants. The belief is that the Bill will make renting properties in England fairer and more affordable for tenants by reducing the costs at the outset of a tenancy, however the fees ban will undoubtedly have a multitude of effects on landlords, as unfortunately the work covered by these charges will still need to be carried out.
The good news is these fees are paid, per tenancy – and tenancies are getting longer (the current average is nearly 2 years), therefore producing fewer fees. In addition, these fees and rent inflation are tax deductible. As such, we calculate most landlords will keep the same return going forward. For your information, tenant fees were banned in Scotland in 2012 with the net result being a rise in rental prices, which helped mitigate additional costs being incurred by landlords.
We’ll be speaking to all of our landlords when you next need to remarket your property (post 1st June), so we can go through everything in detail then. If you have any immediate concerns, we will be very happy to talk to you individually so that you can see any potential impact on your portfolio.
We are also looking to hold a landlord seminar in March, where we can field more questions on the subject. Please keep an eye out for future newsletters with details of this event.
"I have always found Lovetts to be very responsive to any concerns I have. The monthly statement and my rent are always produced on time and they send out an annual statement for tax purposes which is invaluable. Of the 4 letting agents I have used over the past 10 years Lovetts are by far the best!"