Fees Ban is here: but will it achieve what the government wants?

The Tenant Fees Act comes into effect in England tomorrow - but a senior lettings expert is questioning whether it will have the effect the government intends.

Glynis Frew is the chief executive of Hunters - the long-standing franchise agency that has as its chairman the Conservative MP Kevin Hollinrake - but she has nonetheless made an outspoken attack on the government for the policy. 

Last September Hollinrake spoke during one of the House of Commons debates on the Tenant Fees Act - or Bill as it was then - and at the time said: “The legislation will cost me more than I care to think of” but he added:“A tenant chooses a property, they have no choice about who their lettings agent is…There is not currently a free market here.”

But now Frew, in a statement released to mark the introduction of the fees ban and deposit cap tomorrow, says: “A recurring theme seems to have emerged over the last few years when it comes to government housing policy – good intentions bringing undesirable consequences. It’s frustrating because the industry and government are actually joined up in their desire to ensure that tenants get a fair and honest deal.” 

She continues: “A small number of rogue agents or landlords have charged mind-boggling fees over the years, that’s a sad reality, but that’s not a fair reflection of the industry as a whole.

“Agents and landlords proposed and would have embraced fee caps, but the government chose to reject those calls. It now needs to ask itself if this legislation is going to do the job it is intended to do.”

She then asks the question that many across the industry have posed: “Will this really benefit tenants? Market forces will take their natural course and rent increases are likely to follow in many locations, especially where tenant demand is strongly outstripping supply.

“The British have a strong emotional relationship with property and yet in a period of four Prime Ministers, there have been 17 different housing ministers spanning 20 years. 

“Not one has managed to build the number of homes the country is purported to need to satisfy demand and keep property affordable. Maybe, just maybe, if we had a housing minster that stayed long enough to understand the housing industry and the market, we would all do so much better. Housing should not be a vote winning political football, it’s far too important than that. To all of us.”

Here’s a reminder of what the Tenant Fees Act means when it comes into effect tomorrow:

- Agents and landlords must not require tenants to make any payment or loan as a condition of the tenancy and this includes fees for securing references or inventories or any other front-loading of costs;

- The only payments permitted to be charged to tenants are rent; a refundable tenant deposit of no more than five weeks’ rent (where the annual rent is less than £50,000) or six weeks’ rent (where the annual rent is £50,000 or more); and a refundable ‘holding’ deposit of no more than one week’s rent and a payment by the tenant in the event of their default, such as a late payment or breach of the tenancy agreement. Anything else is regarded in law as a “prohibited payment”;

- From June 1 this applies to new tenancies only; from June 1 2020 this will apply to all tenancies;

- Holding deposits must be refunded to tenants within seven days of the tenancy agreement being completed, or within 15 days of taking the deposit if the agreement is not completed for reasons within the agent’s or landlord’s control;

-There can be a small fee if a tenant requests a variation of the tenancy but this is limited to £50 unless additional costs can be shown to have been incurred;

- Local authorities, charged with enforcing the legislation, can fine an agent or landlord up to £5,000 for levying a prohibited payment.

- Local authorities can prosecute or impose a fine of up to £30,000 if an ‘offence’ under the Act has been committed, being where a landlord or letting agent has been fined or convicted for a breach within the last five years and commits a further different breach.