Industry News


Confusion over impact of lettings fee ban


views on its likely impact on the rentals market. First mooted some three years ago, the ban


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means that tenants should no longer be charged for a range of services or activities including property viewings, credit checks, taking up references or establishing a tenancy. In theory this should save each tenant many hundreds of pounds. The charity Citizens Advice claims that private


tenants have collectively been paying £13m of fees each month in England. But many industry experts are warning that landlords and lettings agents will make up any income losses through rent rises and property sales. "The new law means families and other renters


don't have to hand over hundreds of pounds every time they move home," said Gillian Guy, chief executive at Citizens Advice. Others point to the experience of Scotland where


a ban has been in place since 2012 and rents have risen at a faster rate than before the ban. The new rules in England prevent landlords from simply charging a higher rent for the first month to cover the cost. “It is unlawful to charge anything other than rent


and deposit in Scotland, but unfortunately there’s a complete lack of enforcement,” said Sean Baillie, lead organiser for Living Rent in Scotland. “What we’re finding is that letting agents will charge small fees for signing or continuing, as well as direct debit fees, reference fees, admin fees, and opaque fees with no breakdown. People are often desperate to


he much heralded ban on letting fees charged by private landlords and agents on tenants in England has begun amid mixed


get a house, so they sign these contracts.” The new law in England does not mean tenants


will not have to pay any upfront fees. They are still expected to pay the first month's rent and a deposit of five or six weeks rent (depending on the size of the annual rent). Holding deposits have been capped at one week's rent and charges can also be made for replacing lost keys, changes to the tenancy agreement and early departures. Interest is also chargeable on any unpaid rent. An impact assessment prepared by the


Government last year indicated the first year of the fees ban would cost landlords nearly £83m and letting agents would lose £157m. This will be on top of other costs from various tax changes, such as the Insurance Premium Tax, which have hit landlords. Daniel Gibson, an experienced property


management consultant based in Newcastle, said the changes will mean more costs passed on to


landlords, who are likely to increase rents to mitigate their potential losses. He is making cost savings in his business, but expects others to respond differently. “This new Act means that the letting charges


which would normally be split between the tenant and the landlord, now have to be completely paid by the landlord,” said Gibson. “And that means landlords will be looking at ways to recoup the money which will inevitably come back to the tenants.” The London Renters’ Union said: “It’s vital that


this new law is properly enforced, and renters know and can assert their rights without fear of being turned away or mistreated by landlords and agents. “We know that this one change will not fix the


private rented sector. Without strong rent controls, there is still the risk that agents will pass on the cost of fees in the form of rent hikes.”


Wales fee ban to come into force in September


The Welsh Housing Minister Julie James has announced that the tenant fees ban will come into


force in the principality on 1st September 2019, after it receives Royal Assent. The announcement follows the Tenant Fees Act coming into force in England, on 1st June. The Renting Homes (Fees etc) (Wales) Act makes


it illegal for letting agents and landlords to charge for anything other than permitted payments, which are rent, security deposits, holding deposits, utilities, communication services, council tax, and


green deal charges. The Residential Landlords Association was active


in the progression of the legislation, since it was formally introduced by the Welsh Government last year. During the early stages of the Bill, the RLA’s Director for Wales, Douglas Haig, gave evidence on the Renting Homes (Fees etc.) (Wales) Bill to the Equality, Local Government and Communities Committee, in the Senedd.


Regulator intervenes at Welsh extra care housing provider


The Welsh Government has intervened at a small, specialist extra care housing provider over concerns about its governance, ability to manage risks and financial viability. Polish Housing Society owns 93 extra care flats


and a care and nursing home. It was given an ‘intervention’ regulatory grading after the Welsh


Government’s housing regulation team identified concerns with the landlord’s compliance in five of the 10 performance standards. The intervention will involve “continuing to


progress the board’s decision to secure a business model which protects residents and service users”, the judgement said.


The society acknowledges it is experiencing


a number of challenges across its business. It has been working with the Welsh housing regulator and other organisations, for some time to find a solution to these challenges and agree a way forward to ensure continuity of services for its residents.


www.housingmmonline.co.uk | HMM June/July 2019 | 23


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