News & Views

Letting agents fees banned by Government


The long awaited restriction on agent’s fees is one step closer with the recent introduction of draft legislation to ban the requirement for tenants to pay fees or other charges on top of rent and payments for services from third parties. The proposals could also limit the amount of tenancy deposits held by a landlord in a relevant scheme.

The level of fees that tenants pay to letting agents has long been an area of concern, due to the lack of regulation in the market. Following a consultation process, the Government has sought to address the concerns with the introduction of the draft Tenant Fees Bill 2017 (TFB 2017).  In addition, the Government is now in consultation about making it mandatory for letting and managing agents who handle client money to be members of financial protection schemes for clients.

The TFB 2017 seeks to prevent landlords and their agents (on the grant, extension and termination of tenancies) from charging fees or other payments on top of the rent, with the exception of a capped refundable security deposit (at no more than six weeks’ rent). It also requires that refundable holdings deposits are capped at no more than one week’s rent. The restrictions will only apply to those tenancies that are completed after the legislation has come into force and it do not seek to control those fees in long leases, social housing tenancies or holiday lets. In addition, the Government proposes to extend the legislation so that there are restrictions on the fees charged by landlords and any payments to third parties.

The legislation will be enforced by already stretched local authorities (Trading Standards). A rogue landlord or letting agent risks a penalty of £5,000, with further penalties of up to £30,000 or criminal liability where there are subsequent breaches within 5 years. Any prohibited payment, plus interest, will be required to be repaid to the tenant where there are deemed breaches.

The TFB 2017 also seeks to amend the Consumer Rights Act 2015 (CRA 2015) so that letting agents must clearly display on property portals any letting fees to the consumer and identify which redress scheme they are a member of, and whether they have client money protection.  This is a welcome move to legislate the online space, to match the requirements of agents’ websites and offices.

A better and fairer market place will exist once all lettings agents are regulated, aligning their practices with the same quality standards as those of other professions, such as solicitors.  This is a long overdue piece of legislation and will not come too soon for those who wish to see a more regulated lettings market.

If you require anymore information please contact Caroline or the residential team.

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