Wednesday’s Queens speech was about recognising and grasping the opportunities that lie ahead for the United Kingdom as the UK leaves the European Union. 27 Bills and draft Bills were announced in a legislative programme, which will deliver on a variety of themes, which includes a Draft Tenants’ Fees Bill.
The Queen’s Speech announced that tackling unfair fees on tenants will make the private rental market more affordable and competitive. The Draft Bill will bring forward proposals to:
- ban landlords and agents from requiring tenants to make any payments as a condition of their tenancy except for the rent, a capped refundable security deposit, a capped refundable holding deposit and tenant default fees
- cap holding deposits at no more than one week’s rent and security deposits at no more than one month’s rent
Some of these points come as a surprise to those working in the Private Rented Sector and were not referenced in the Consultation. So, what are the bombshells?
- The Capped Refundable Deposit – Currently the average deposit is the equivalent of 6 weeks rent, often not enough to cover dilapidations & in some cases, unpaid rent. Obviously, the deposit will still be treated in line with the Housing Act 2004, therefore, refundable only if deductions do NOT need to be made.
- The Capped Refundable Holding Deposit. This was mentioned in the Consultation; however, it was a question and not a “done deal’. How do you refund a “Holding Deposit” if the tenant does withdraw from the let? How do you cap a Holding deposit when there is a disparity between London and, for example, Gateshead? Will the “Terms” be as confusing as the TPOS Code of Practice? When will an agent retain the “Holding Deposit”?
There has also been reference to the tenant being able to make a “claim” for having been charged “unfair fees”. Clearly this will not be retrospective.
Given the content of the Queen’s Speech, MAC The Property Company will be keeping a close eye on what will be included in the Draft Bill due to be published in the Autumn and, as ever, keep you updated.