A new law will be enacted in England that means landlords and their agents will no longer be able to charge fees to tenants for tenancies signed on or after 1 June.
Any costs will now need to be met by the landlord – many may up their rents to recover these costs as a result.
From 1 June, the only costs landlords and agents will be able to charge tenants for will be:
Rent: Regular rent payments, usually in advance for each month.
Utilities and council tax: If included within the tenancy.
A refundable deposit: Capped at five weeks' rent.
A refundable holding deposit to reserve the property: Capped at one week's rent.
Tenancy changes requested by the tenant: Capped at £50 (or "reasonable costs").
Early termination of the tenancy requested by the tenant.
Defaults by the tenant, such as fines for late rent payments or lost keys. These must be "reasonable costs", with evidence given in writing by the landlord or agent.
Any other fees will be banned, and landlords or agents found charging fees can be fined up to £5,000 for a first offence. If they break the rules again within five years, they could be given an unlimited fine.
The UK Government suggests that they are introducing the fee ban to help enable tenants to save towards buying their own property. In light of the many comments we've received from landlords across the UK it's likely that tenants will end up paying much more in the long term as landlords increase monthly rents to try and recover the additional costs they are having imposed on them by the new legislation. The general belief is that the Government should have imposed a cap on the amount tenants can be charged.
If rent increases by just £25 per month, a tenant will pay an additional £300 each and every year instead of an upfront fixed fee that currently averages £250 - £300 in total!
At Radstones we will continue to negotiate very strongly on behalf of all our Clients to ensure we obtain the best value rents for them, and will be monitoring developments and reporting again after the first three months.