Fees ban - Citizens Advice calls for default fees ‘loophole’ to be closed

A national charity is calling on the government to tighten the 'default fees' clause which is part of the Tenant Fees Bill currently moving through Parliament.

Citizens Advice says that the clause could mean 'unscrupulous' landlords and letting agents continue to hit renters with 'unfair charges' by exploiting a loophole after the ban becomes effective.

The default fees clause has been included to allow for tenants to be charged following tenancy breaches such as lost keys or rent arrears.

Citizens Advice says it is concerned that there are currently no restrictions on what a 'default' could be 

The government has said it will issue guidance on default fees but it would not be 'legally enforceable'.

The charity is therefore calling on the government to close the potential loophole by providing clarity on what a default fee is and writing it into law.

It has also called for security deposits to be capped at four weeks' rent, instead of the six weeks currently planned.

It is also claiming that since the proposal for a ban was first announced in November 2016, tenants have paid £235 million in 'unfair and uncompetitive fees' at a rate of £13 million per month.

“The government’s pledge to ban fees will be fundamentally undermined unless the clause on default fees is significantly tightened," says Gillian Guy, chief executive of Citizens Advice.

“The loophole leaves tenants vulnerable to rogue landlords and agents looking to continue charging unfair fees.

“The government must tighten this clause and issue a clearer definition of what a default fee is. Leaving this just to guidance risks poor outcomes for both renters and landlords.”

Earlier this week, the Tenant Fees Bill had its second reading in the House of Commons, which was passed unanimously after a three-hour debate.

“There is clearly overwhelming support in Parliament for the ban, however tonight’s debate makes clear MPs do not understand what is meant by default fees and the implications of reducing tenancy deposits," says David Cox, chief executive of ARLA Propertymark.

"As the Bill goes to committee stage it is more important than ever that agents go and see their MPs to make the case for why these fees remain vital even after the ban comes into force.”