The Queens Speech – Fees and Deposits
The queen’s speech included the new legislation with regards to the banning of lettings agent’s fees and damage deposit caps, which is to go further than originally discussed and will now also apply to private landlords. Many landlords handle their own lettings, a number of them don’t charge administration or referencing fees, the ones that do, will no longer be allowed to do so. The new proposal will also allow tenants to recover any fees unlawfully charged on new tenancies in the future.
Nothing will be implemented until after a parliamentary debate, the consultation on banning these fees has now closed, however it may have to be re-opened. The enforcement of the new legislation is likely to be in the next session of parliament, this will not take priority over Brexit, and crucially the Bill is only listed in “draft” form, meaning there’s no guarantee it’ll be a finished law by the end of the two-year period in 2019.
The queen’s speech also included security deposits for rented properties being capped at no more than one month’s rent and holding deposits at no more than one week’s rent. The National Landlords Association (NLA) estimates that around forty per cent of deposits are greater than one month’s rent. “Whilst capping them may reduce the move-in costs for some, it will increase the temptation for others to view the deposit as the last month’s rent, leaving landlords out of pocket at the end of the tenancy if, for example, the property has been damaged,” said Richard Lambert, NLA chief executive.
Excessive letting agent fees, particularly in London, combined with high moving costs for renters has spurred these decisions. The new legislation will apply to England only, with the devolved arrangements for legislation on housing being left to the Parliaments in Wales, and Northern Ireland with Scotland already having fee bans and deposit caps in place already.
MTM will be watching this very closely and will be giving our landlords updates, as and when we receive more news. Whatever happens we will be working together with our landlords to make sure that their investments run as efficiently as possible.
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