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Tenant Fees Bill will cost landlords £82m

Sally Walmsley
Written by Sally Walmsley

The new ban on tenants fees will cost landlords £82.9million in the first year, it was revealed today, with letting agents paying £157.1m.

The figure was included in the Government’s official response to the HCLG Select Committee’s report on the draft Tenant Fees’ Bill.

The full response, which has been published here, includes an impact assessment stating: “The main costs fall on landlords and letting agents as a result of the ban on tenant fees.”

It goes on to state that in the first year of the policy, it is estimated that the cost to landlords will be £82.9m whilst the cost to letting agents is estimated to be at £157.1m.

The impact assessment goes on to say that these estimate figures include ‘pass throughs’, for example by letting agents charging landlords higher fees.

The concerns about the tenant fee ban costs being passed on to landlords was raised by RLA Policy Director David Smith, when he gave evidence at the CLG Select Committee in January. 

In response to the Select Committee, the Government has accepted the Committee’s recommendation to amend Schedule 1, paragraph 1 (6), to make sure landlords don’t increase the first month’s rent in a bid to recover the fee.

The Government notes: “Landlords will only be able to charge a varied level of rent if this has been agreed with the tenant subsequent to the tenancy being entered into. Government has been clear that the intention of this paragraph is to prevent landlords and agents from inflating the first months’ rent as a means of circumventing the ban.”

Deposits

On deposits, the Government has rejected suggestions put forward by the Select Committee, to lower the cap on deposits from six to five weeks, noting that ‘a depsoit of six weeks of rent will be an upper limit and not a guideline’, adding that they expect that landlords should consider on a case by case basis the appropriate level of deposit to take and will provide guidance to this effect.

The deposit is also only retained by the landlord in instances where the tenant defaults on their obligations under the tenancy.

However, the Government has accepted the Committee’s recommendation, that “The Government should amend Schedule 1, paragraph 3, and Schedule 2, to clarify that holding deposits can be paid to letting agents as well as landlords.”

What happens next?

Following the publication of the report, the Bill will now move on to its second reading, which will be the first opportunity for MPs to debate the main principles of the Bill.

About the author

Sally Walmsley

Sally Walmsley

Sally Walmsley is the Communications Manager for the RLA and Editor of RPI magazine. With 16 years’ experience writing for regional and national newspapers and magazines she is responsible for producing articles for our Campaigns and News Centre, the weekly E-News newsletter and editorial content for our media partners.

She issues press releases promoting the work of the RLA and its policies and campaigns to the regional and national media and works alongside the marketing team on the association’s social media channels to build support for the RLA and its work.

1 Comment

  • The fees and deposit I paid to rent a 2 bed flat in Colchester including the first month’s rent was £2300 3 years ago
    The when I moved I cleaned the flat but the landlord went to the tds and put in quotes for work ( not receipts)
    For cleaning and damage
    But he used it to turn a 2 bed into a 3
    And there was no damages or cleaning needed and the tds gave him £400
    So I don’t trust the tenency deposit scheme
    I will always cut out letting agents and go direct

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