Changes to Tenant Upfront Costs

Wed 29 May 2019

TENANT UPFRONT COSTS REDUCED WHILE PROFESSIONAL
LAND AGENT SERVICE REMAINS

Changes to the law, to be introduced under the Tenant Fees Act 2019, mean that the process of renting a property is about to become cheaper and fairer, for the tenant with reduced upfront costs. However, Residential Lettings Manager Teresa Sargeant of YoungsRPS explains, “The forthcoming legislation makes finding the right professional property agent even more crucial under changing legislative conditions.”

The new legislation makes it unlawful to charge tenant fees, and there is a fine of £5000 for any landlord or agent who does so. Therefore the cost of renting property will be reduced, with the only up-front costs allowable being a “holding deposit”. This is limited to a week’s rent, usually held for 15 days. This amount can also later be put towards rent or meeting the full deposit.
Agents will only be able to charge tenants for costs incurred in: rent arrears, lost keys, the surrender of the tenancy, or change of tenancy (capped at £50).

“The effect is intended to make renting easier, and to give people more affordable choices when choosing where and what they live in. As a firm we are keen to assure both landlords and tenants that changes to the law will not affect service standards, and in fact the change is supported as it brings the market better into line with the needs of today’s letting landscape” adds Teresa.

The new tenant fee ban comes into force on 1st June 2019 and the legislation means that the range of charges that can be made by estate agents has reduced. Statistics on the growth in the rental markets show a lot of people now choosing to rent as a lifestyle choice, so this change is a good thing for incoming or existing tenants, and will make renting more accessible.

Before, someone wishing to rent a new home could have been faced with a substantial upfront charge. “Previously, you had to find an application fee and the deposit, which can often be large costs, and a significant deterrent.”

If all firms abide by the Act, it is hoped the new rules will improve the private rental sector for millions of tenants. This could risk a rise in rents, but the results are yet to be seen.

Teresa concludes: “Further guidance will be published by the government to help explain how the legislation affects everyone. Ensuring all land or estate agents keep up to date with these alterations cannot be guaranteed. Therefore, to avoid the accumulation of hidden fees, finding a respected firm with professional service values will be vital, bringing confidence that the law will be followed and that no extra costs are incurred.”

For further information please contact your local youngsRPS office.