Tenancy fees are now BANNED in most of the UK – but you might still have to pay
Good news! Now those painful tenancy fees for moving in, moving out, getting checks (the list goes on…) have been banned in a second region of the UK – with a third part banning them soon.
Ever been charged huge amounts for check-in or check-out fees and wondered how some paperwork could really cost that much? You and us both.
Thankfully, from today (1st June), those days are over for people in England. But it's not just students in England who can celebrate the end of unfair fees – this news follows a 2012 ban on letting fees in Scotland, and it'll be enforced in Wales from September 2019.
We've put together all you need to know about how the new ban on fees affects you. Happy (tenancy-fee-free) house hunting!
Criteria to stop paying letting fees
If you're still yet to find your house for next year, you're in luck – this ban applies to all new tenancy contracts signed in England from today.
But, annoyingly, this does mean that if you signed off for your new place anytime before 31st May 2019, you might still have to pay those dreaded fees to move in. It's not all bad though...
From 1st June 2020, all tenancy agreements will be free from tenancy fees, even if they were signed before 1st June 2019.
So, if you have a fixed-term contract that ends after June of next year, or you're able to renew your contract past then, your landlord or estate agent won't be able to charge you check-out fees after the 2020 deadline.
It might be worth thinking about staying in the same house another year longer if you can – it could save you big money in fees.
Note: If you renew your tenancy before 1st June 2020, you may still have to pay renewal fees if stated in your contract.
How much money renters have been paying in fees
Citizens Advice's most recent research from 2015 found that tenancy fees can vary massively, from £15 – £300 to renew a contract or £6 – £300 to check a reference.
And since November 2017, when the government committed to banning tenancy fees, private renters in England have been paying a whopping £13 million a month in letting fees (a total of £234 million).
Gillian Guy, Chief Executive of Citizens Advice, said:
The end of these uncompetitive and unfair letting fees is a real win for renters.
The new law means families and other renters don’t have to hand over hundreds of pounds every time they move home.
We look forward to working with the government to further strengthen the hand of renters in a market where they have little bargaining power.
Here's what landlords can and can't charge you for
Before the ban was introduced, it was standard practice for landlords and estate agents to charge six weeks' rent as a deposit, but now that's changed.
Citizens Advice, who've been calling for a ban on tuition fees for around 10 years, urged legislators to lower the deposit amount to four weeks – it hasn't gone down quite that much, but the final Bill decided on five weeks as a compromise.
As well as this, Citizens Advice also worked on closing a “default fees” loophole where landlords and agents added unfair terms to tenancy agreements to charge extra fees.
What landlords and agents can no longer charge you for
- Viewing fees
- Fees for setting up the tenancy
- Third-party fees (e.g. for reference/credit checks)
- Check-out fees.
What they can still charge you for
- Bills (if agreed in the contract)
- Refundable holding deposit to reserve a property (capped at one week's rent)
- Refundable tenancy deposit (capped at five weeks' rent if yearly rent is less than £50,000)
- Default fees for late rent and replacement of a lost key/security device
- Damages (taken from your deposit) or losses because you breached the contract (following court action)
- Changing the tenancy when requested by the tenant (usually capped at £50 or reasonable costs incurred if higher)
- Ending the tenancy early when requested by the tenant.
How the fees ban could affect rental prices
Although on the whole, this is very welcome news, there are concerns that landlords and estate agents could put up the cost of rent to make up for the lost fees.
John Stewart, policy manager at the Residential Landlords Association, told Save the Student:
What impact [the ban] will have on rents remains to be seen, but there are fears that letting agents will start to charge landlords more to cover the costs of things such as referencing and credit checks, which could then be passed to tenants through rent increases as landlords cover their increased costs.
Students will benefit from the fees ban in the same way as other private tenants, although legislation does not address issues such as fees for cleaning services, which are sometimes included in student letting contracts.
It could be that these could be covered by rent increases too, or responsibility moved fully to the tenants.
But, we hope the risk of rent going up after this fees ban will be minimal.
After tenancy fees were banned in Scotland, Shelter found in 2013 that landlords had been no more likely to increase rent since 2012 than landlords anywhere else in the UK.
Fingers crossed landlords in England will follow Scotland's example...
For more advice on student housing, check out the Accommodation section of our website.