Look at Lettings
WE were finally given the deadline of the 1st June 2019 as the date the Tenant Fee Bill will be in effect. Although landlords may have heard whispers of the ban, many have failed to consider the impact it will have for them. The ban works on the basis that all fees for tenants are banned unless the bill expressly states they are allowed. Permitted fees are as follows; Landlords and agents will be able to charge the exact cost of replacing a lost key or security device. A charge for the time taken to retrieve this key or fuel costs will not be permitted. Late payment fees will no longer be legal under the bill, a landlord will be able to charge an interest on the late period of rent calculated at 3% above the Bank of England base rate (currently set at 0.75%). However, this can only be charged after 14 days of non-payment of the rental period. A £50 fee for changing a sharer on a tenancy will be legal under the ban, as will every novation to an agreement that a tenant requests. Therefore, if a tenant requests to have pets or to paint a wall midway through a tenancy and you must change the agreement as a result, you will be able to charge £50 for this. An early release fee is currently allowed under the bill if requested by the tenant during a fixed term. The bill currently states the fee should amount to the landlord’s loss, but if the tenant requested release in month three of a twelvemonth fixed term contract, it could be nine months’ worth of rent. As this could be a significant amount, we are expecting this will be changed at a later stage. A landlord can take one weeks holding fee from a tenant when the tenant wishes to take up a tenancy. However, if the tenancy agreement is signed within 14 days by the tenant or the landlord pulls out, the holding fee must be returned to them. This fee can be kept if the tenant fails to sign within this time, the tenant pulls out of the deal or the tenant has not declared adverse credit. However, the landlord must write to the tenant setting on their reasons for doing so. Landlords will only be able to take a 5 weeks’ worth of rent as a deposit. You must work out the 5 weeks using this formula: the monthly rent multiplied by 12, then divided by 52 and multiplied by 5. This gives you an exact 5 weeks rent. It is thought there will be a transition period of 12 months after 1st June where the fees in existing agreements will apply. This means previously registered 6 weeks deposits can stay at this rate until the tenancy is renewed (a renewal is classed as a new agreement and the deposit will need to be lowered to 5 weeks). However, after 1st June 2020, it is indicated that the ban will then apply to any continuing month to month tenancies started before the ban and the 5 weeks rent cap will apply. A breach of the bill is deliberately severe; £5,000 for your first offence and £30,000 per offence thereafter, however just taking one upfront fee from a tenant (broken down into a referencing fee, deposit protection fee and tenancy agreement fee) could result in 3 fines in one go, which could be even doubled or tripled for more than one tenant. Could you suffer fines of this magnitude and still prosper?