This month the Department of Communities & Local Government (DCLG) published the Draft Tenant Fees Bill. This is the precursor to the proposed legislation which will ban the charging of any Fee to tenants.
The Bill focuses on several key points:-
- Prohibitions applying to landlords & to Letting Agents
- Prohibited and permitted payments
- Effect of a breach on a tenancy agreement
- Treatment of holding deposit
- Enforcement by local weights and measures authorities
- Financial Penalties
- The Bill also includes amendments to the Consumer Rights Act 2015, that a Letting Agent’s duty to publicise fees on third party websites
Prohibited & Permitted Payments
The Draft Bill is in some places incomprehensible, however, the Prohibited Payments draws the reader in, but a definitive list has yet to be provided. However, anyone could draft a list of what the possible “Prohibited Payments” could be. To add to the “Prohibited” are the “Permitted Payments“. Again there is very little flesh on the bones of the Draft Bill, but we are given the following information as to what will be permitted:
2. Security Deposit – to be capped at the equivalent to 6 week’s rent
3. Holding Deposit – to be capped at the equivalent to one week’s rent
4. Payment in the event of a default
Points 1 & 2 are quite straightforward; Point 3, the “holding deposit” will have TERMS attached to it and time-frames and constraints.
It is Point 4 – Payments in the event of a default which requires a great deal of clarification. The Draft Bill states that this is a payment that a tenant is required to make in the event of a default.
The Bill defines a DEFAULT to mean:-
- A failure by the tenant to make a payment by the due date to the landlord (rent arrears or late rent payments)
- a breach by the tenant of a covenant or condition of the tenancy. (This ranges from and is not limited to – damage, dilapidations, missing items (currently dealt with by the deposit) having a pet without permission, additional occupants at the property without permission, change of sharer, requesting an early termination of contract, carrying out illegal or immoral activity, voluntary or permissive waste and so the list goes on. The list is food for thought – what DCLG finally decide will be of interest because who will decide what amount can be charged for a breach of contract? Will this be open to abuse? Will there be a definitive list of breaches? How will an agent or landlord obtain the “default charge” from tenants?
The Parliamentary Calendar does not currently show any scheduled reading of the Draft Bill so only time will tell what this legislation will impose and allow.