It has become clear since the Tenant Fees Act came into force on June 1, 2019 that there appears at least to be some continued confusion in the market place, where neither tenants and/or lettings agents seem to be aware of the new legislation, are being forgetful or are simply ignoring it. There are enough examples to suggest likewise that in tenants handing over fistfuls of admin fees and 6 week deposits to these agents that they are none the wiser as well.
We appreciate that it can take time for new legislation to be applied in a practical sense if it is relatively sudden or complicated but this has been one of the most heralded pieces of populist legislation talked about for many years, and well publicised in the main stream press, not just the property industry. The government after all only passed the legislation so they could attempt to woo thousands of voters with the equivalent of a quick tax break without them having to pay for a quick tax break. Generation Rent are always a political hot potato between Labour and the Tories, so this was something that got a lot of airtime from the politicians vying to be seen to the vanquishers of unfair charges to tenants. So, in this context, forgetting that many lettings agents may not be adhering to the new legislation, it is surprising that not more tenants are quick to correct them when they get overcharged, and it's not the odd occasion.
One district council in Oxfordshire alone has demanded the return of nearly £35,000 in unlawful administration fees and deposits. Bearing in mind there are 192 district councils, that would mean £6.6m would have been unlawfully taken since June. We have no reason to think why Cherwell would be any busier than anywhere else, in fact it is quite rural, so when you factor in far greater numbers of tenancies in metropolitan areas, the number is probably far higher.
So there needs to be a far more public education piece for tenants in the coming weeks and months and lettings agents need to get to grips with the new legislation before local authorities start handing out some big fines. The honeymoon period is pretty much over and unless they start to see a better standard of compliance then that will be their only course of action.
The summary of the Tenant Fees Act is quite straightforward.
1. Fees to tenants are banned. This includes renewal fees unless an existing tenancy agreement in place before June affords this, but only for a limited period until 2020. This includes all charges associated with creating and ending a tenancy, such as referencing, cleaning and check outs. There are only a couple of permitted charges now for final utilities and cutting keys for example.
2. Security deposits are capped at 5 weeks rent, not the 6 that has historically been the case with most tenancies.
3. There are also changes to how holding deposits are handled and returned to tenants and changes to the use of a section 21 by a landlord if fees or deposits have been retained or not returned as per the legislation.
Whilst the legislation was politically motivated and clearly unwelcome by most people other than tenants, it is nevertheless a reality and one that lettings agents should see as an opportunity to gain a brief commercial advantage in getting it right, when clearly there are many that are still unable to. Making the changes much more publicly available to tenants might be a good step in that direction.
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