Tenants will no longer be charged fees at the beginning of their tenancy, after new rules banned agents from charging for credit checks, inventories and references.
The only fees letting agents can charge after June 1st 2019 are ‘permitted payments’ such as deposits, certain changes to the tenancy agreement, late payment and lost keys.
The good news for tenants is that they’ll have less money to fork out at the beginning of their tenancy, when they have to find a deposit, their first month’s rent and often want to buy things for their new home.
Anya Mathewson, Managing Director of Letters Property Management, said: “Although new tenants will see immediate benefits, landlords may feel they have to put rents up to compensate. Tenants move into and remain in properties because they like the property itself, regardless of the fees, so over the long term, they could be the ones who pay more.”
She added: “We have always charged fairly and it’s a shame Letters and other responsible agents are being penalised because a few unscrupulous landlords and agents have overcharged in the past. But we are fortunate that as an independent business, we don’t have shareholders pressuring us to protect our profit margins. We will work with the new system and continue to be transparent and fair in our charges to both tenants and landlords.”
Apart from rent and relevant utility bills, the only payments that landlords and agents can now charge are:
- A refundable tenancy deposit capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above.
- A refundable holding deposit (to reserve a property) capped at one week’s rent.
- Payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher. Examples include a change of sharer in a joint tenancy, permission to sub-let or run a business from the property, or to allow pets to live at the property.
- Payments associated with early termination of the tenancy, when requested by the tenant. This is capped at the landlord’s loss or the agent’s reasonable incurred costs.
- A default fee for late payment of rent and “reasonable costs” for the replacement of a lost key/security device, where required under a tenancy agreement
Where a tenancy agreement was entered into before 1 June 2019, landlords and agents will still be able to charge fees until 31 May 2020, but only where these are required under an existing tenancy agreement. Tenants cannot be charged for renewing their tenancy.