Tenancy deposits capped and unnecessary fees banned as new Act comes into effect
The Ministry of Housing, Communities and Local Government (MHCLG) has claimed that renters will now be able to save some £240 million each year in England.
This is the result of the new Tenant Fees Act, which came into effect on Saturday the 1st of June, which has created a cap on tenancy deposits and barred landlords and lettings agencies from charging “unnecessary fees”.
Under the new rules, deposits for new tenancies from the 1st of June are capped at the equivalent of five weeks rent.
Including this, renters can now only be charged monthly rent, a refundable holding deposit capped at no more than 1 week’s rent, an early termination payment, costs associated with utilities, TV license, council tax and communication services, or a default fee for late payments or the replacement of a lost key/security device.
The MHCLG expects these changes will save around £70 per household, or £240 million over the course of a year, with the Secretary of State for Housing, James Brokenshire, saying:
“Tenants will no longer be stung by unreasonable costs from agents or landlords, thanks to the implementation of the Tenant Fees Act. This Act bans unnecessary letting fees and caps the majority of deposits at 5 weeks’ rent, helping renters keep more of their hard-earned cash.”
David Cox, Chief Executive of the Association of Residential Letting Agents (ARLA) warned:
“Although the Tenant Fees Act has been front of mind for a while, it’s important members stay up to date with other laws and local licences that are being introduced, as a breach of the ban can result in a large fine, so it’s vital agents get this right.”
A recent report by investment platform Hargreaves Lansdown has claimed that younger tenants in the UK are four times more likely to downsize than older homeowners.