Following the launch of the Governments Draft Tenant Fees Bill the Ministry of Housing, Communities and Local Government Committee (MHCLG) has been asked by the Secretary of State to carry out a pre-legislative scrutiny of the draft bill.
On the 26 March 2018 the Committee officially approved its report that includes:
- Landlords should not be able to retain the full holding deposit should a tenant fail the referencing checks despite having provided accurate information.
- Security deposits should be capped at the equivalent of five weeks’ rent in recognition that finding six weeks’ rent could cause financial difficulties for tenants.
- The type and amount of default fee needs to be better regulated as they could be open to abuse.
- Impact Assessments should be published alongside every draft bill
Clive Betts MP, Chair of the Housing, Communities and Local Government Committee, commented:
“With more and more people living in the private rented sector, this legislation has the potential to make a difference to millions of people by cracking down on unfair fees and saving tenants hundreds of pounds.
We believe however that there are clear improvements that could be made to the Bill that would ensure it has a much better chance of delivering on its aim of making renting fairer and easier.
Moving home is already an expensive time and many people struggle to find large sums of money at the start of their tenancies to put down as a deposit.
Lowering the cap from six weeks’ worth of rent to five will help make the private rented sector much more affordable, while also keeping protection for landlords from rogue tenants.
We also had concerns about how the law will be enforced. Funding enforcement through the retention of fines gives local authorities a perverse disincentive to proactively engage with lettings agents and landlords.
If councils are to be given this extra enforcement responsibility, they must either be given extra resources or the maximum amount of civil penalty needs to be increased.”
The report has concluded that it is unclear whether fees can be charged at the end of a tenancy and the Committee welcomes the Government’s intention to clarify that these fees will be banned.
The Committee is also requesting greater clarity on what constitutes a reasonable default fee, being a legitimate cost to the landlord that would be permitted under the legislation.
The government is determined to make sure the housing market works for everyone. The Ministry for Housing, Communities and Local Government expect the tenant fee ban to come into force after spring 2019.
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