The Tenant Fee Ban

The Tenant Fee Ban

The tenant fee ban

The Tenant Fee Ban

What’s Changed?

There have been over 160 legislative changes to residential lettings over the past 2 years alone and on the 1st June 2019, the Tenant Fee Ban will become law.

The ban will make it illegal for an agent or landlord to charge a tenant anything other than rent, utilities and damages.  Tenants have historically been charged to arrange the administration of their own tenancy and for many agents, this represents well over 30% of their business income.

Graham Jolliffe, Director of Maher Ross said:

The tenant fee ban is going to shift the way in which tenants are charged for the administration of their property.  Traditional charges for compiling tenancy agreements, inventories, check-ins, renewals and other administrative matters will soon have to be carried by landlords”.

The government believes that the Bill will make renting properties in England fairer and more affordable for tenants by reducing the costs at the outset of a tenancy, at the same time as improving transparency and competition in the private rental market. In short - tenants will find it much easier to move and to compare the price of a property on a ‘like for like’ basis; however, this is predicted to increase monthly rents across the Island’s limited rental sector.

Chris Maher, Director of Maher Ross added:

We’ve always tried to look after our tenants by keeping their fees as low as possible - and they now represents about 12% of our income - I regret that we are going to have to pass these costs on to our landlords, many of whom have already asked us to consider increasing rent to cover them.

Other Changes

Landlords may not be aware that the tenant fee ban includes much more than a ban on tenant fees.  For example:

Tenant Deposits.  Deposits will be limited to a maximum of 5 weeks rent - meaning that many landlords will have to refund some of the deposit they have already accepted.  Also, an additional pet deposit will no longer be acceptable - instead, ownership of a pet is most likely going to add up to a further £20 pcm to a pet owner’s monthly rent.

Repairs.  Some repairs will also be handled differently - minor repairs which would normally be chargeable to tenants, like unblocking drains or fixing electrical trips, may have to be charged to the landlord instead.  It should be possible to reclaim justifiable costs from the tenant at the end of a tenancy but this has yet to be tested in Court.

The Way Forwards

Our fear is that, while the government’s intention was to make the private rental sector more affordable and fairer for tenants, they will likely end up worse off.  Many of the Island’s landlords, are smaller landlords, who operate on very tight margins and will now be forced to raise rents to cover the increased costs they will incur as a result of the bill.

Contact Graham at Maher Ross on 01983 563000 if you would like any further information.