The Tenant Fee Ban


New regulations mean that Estate Agents and Landlords are no longer allowed to charge fees to their lettings applicants.



What are these fees and how were they used?


Previously if you wanted to rent a property through an estate agency, you were asked to

pay an admin fee (£100 / £200 per each adult applicant), and in most cases also a

check-in fee (generally an additional £80/£150 in total).


Most reputable agencies would apply a portion of this fee towards hiring a third party

reference company (ie. Rent4sure or Parragon) to “check” the credentials of each

applicant. This consists of a credit check, and collecting references from each

applicant’s employer as well as their current or previous landlord.


These third party companies usually charge the Estate Agency around £20 per

application. The remainder of the admin fee is applied to the paperwork and

administrative side of the business - creation of the tenancy agreement, filing

necessary documentation, creation of the ‘welcome pack”, etc.


The separate check-in fee allowed agencies to pay an inventory company that would

objectively inspect the property, take photos of the physical space, and file a report on

the condition of the property the day of the check in.


It is important to keep in mind that reputable agencies use third party inventory clerks because they are impartial and would therefore be in a position to objectively facilitate controversial situations (should any arise) at the end of the tenancy. This equally safeguards the tenants, landlords, and agent in the event of a dispute.


A quality inventory company will charge estate agencies between £80 to £150 (price varies with property size) for a thorough check-in report. Typically tenants used to pay prior to moving in, and the landlord would have paid at the check-out - so a fairly even split.


Well all those fees are gone. Estate Agents won’t be able to charge

tenants anymore.


What are the new regulations coming into place?


In 2019 year the government announced: “a new bill to ban letting fees across

England is set to save tenants millions of pounds and make the market fairer and

more transparent.”


In summary:

- Estate agents and landlords are no longer allowed to charge excessive fees to their

tenants (no check in fees, no admin fee, no tenancy agreement renewal fees);

- The holding deposit (the non-refundable amount of money a tenant pays to

reserve a property) will be capped to one week’s rent maximum;

-£50 is the maximum amount a landlord /estate agent will be allowed to ask

his tenants to pay in order to change a tenancy (add a tenant in the tenancy

agreement for instance);

-The security deposit will be capped at a maximum of 5 week’s rent. (This is

the amount of money that will be held in an accredited government scheme,

which the landlord will be allowed to keep partially or in full should the tenant damage the property or not pay the full agreed rent amount).


Landlords and estate agents in breach of this ban will be facing fines from £5,000 to

£30,000.


How will this effect me, and what should I be aware of?


Each tenant could save roughly £200 every time he or she rents a new

property.


On the other hand, it is important to be aware that estate agents could potentially

try to cope with this “loss” by cutting costs and providing both landlords and

tenants with less accurate check-in reports, less thorough checks, and less of a

guarantee that both sides are secure.


Our suggestion is: if you are dealing with an agency or renting through a private

landlord directly you should always acquire a professional check-in report from a third

party. Depending on the size of the property, this will run between £80 and £150.

But in the unfortunate circumstance that you and your landlord enter in a dispute, it

could save you a lot of money and time in the future.


If you are a landlord - first of all, make sure you are complying with the current laws

and if you choose to take advantage of the expertise of an estate agent, make sure

you are choosing the right one.


If you are looking for further advice please email us on hello@alex-matteo.com or call us on 0203 983 1833.

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