The tenant fee ban comes into effect on 1st of June 2019 in England, this means that lettings agents and landlords will be banned from charging any fees prior to the signature of the contract, apart from a deposit, as stipulated by the Tenant Fees Act. Deposits are also affected by the new regulation, and are capped at 5 weeks rent, whereas previously it was common to request 6 weeks.
The stated aim of the tenant’s fee ban is to reduce the costs faced by tenants at the start of their agreements, and also increase transparency, so they know exactly how much a tenancy will cost them, and not be subject to any hidden fees or charges.
The costs that were once paid by the tenant fee, for example referencing, will now be assumed by landlords. There are tough penalties for violating the tenants fee ban of up to £30,000.
While the government’s aims are to increase transparency for tenants, there are concerns around the impacts on lettings agents, many of whom are small businesses that depend on the tenants fees as a vital cash injection and helps keep them afloat.
There is concern on the part of landlords also, at having to pay more money to find tenants, and already in anticipation of the ban, according to ARLA there has been an increase in the amount of landlords selling their buy-to-let properties in April 2019.