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Tenant Fees Bill – what you need to know about the Govenment amendments

Article Posted -06 Dec 2018 on NAL website

The Government has proposed amendments to the Tenant Fees Bill, which is currently being debated in the House of Lords. The amendments are due to be debated in the Lords on Tuesday 11 December.

The main amendments which affect landlords are:

The maximum security deposit being limited to five weeks’ – rather than six weeks’ – rent, for tenancies less than £50,000 per year (and remain six weeks for tenancies above this threshold).

The Government’s original proposal was for the security deposit to be capped at four weeks’ rent; we campaigned for this to be increased to six weeks to allow flexibility. Our research shows that landlords who hold a deposit currently ask for an average of 4.8 weeks’ rent, and so many will be unaffected by the change. However, we remain concerned that the lower limit will affect the ability of tenants who have a higher risk profile, for example if they own pets or have a poor credit rating, to agree a tenancy. We have expressed our concerns to the Government and will continue to push for changes to enable landlords to manage risks effectively.

The ‘default fees’ or permitted payments where costs arise from a fault of a tenant have been limited to instances where tenants have lost a key or other security device, or where a tenant is at least two weeks late in paying their rent.

Where there are further contractual breaches, landlords will be able to charge for damages, however if a tenant fails to pay, the landlord will either need to pursue this claim in court or make a claim against the security deposit via their deposit protection scheme. There remains a clause in the Bill for the Government to amend the list of permitted payments in the future, without needing to go back to Parliament.

A number of amendments related to holding deposits, taken before a tenancy begins.

Landlords and agents are only allowed to take one holding deposit for a property at any one time. They must pay the first prospective tenant’s deposit back in full before taking a second holding deposit (unless allowed to retain the deposit e.g. because the tenant chooses not to enter into the tenancy, or provides false information).
Where landlords and agents do retain a deposit, they must explain to the tenant in writing why they are doing so.
If there is the right to retain the deposit, but the tenancy is still entered into, it must be returned to the tenant.
The holding deposit must also be refunded if a requirement is imposed which breaches the ban or if the landlord or tenant behaves in an unreasonable manner, so that the tenant cannot be reasonably expected to enter into the tenancy.

Other amendments proposed

The Government has proposed amendments in relation to client money protection (CMP), including ensuring that deposits protected in an approved tenancy deposit scheme are not required to also be protected under CMP.

They have also proposed excluding Homeshare schemes and local authorities and the Greater London Authority where they are acting on behalf of a tenant from the scope of the Bill. The latter is to allow local authorities to continue to make payments in connection with a tenancy where they are acting on behalf of a tenant or guaranteeing their rent – particularly to support local authorities to undertake their duties to prevent homelessness.

Next steps

The proposed amendments to the Bill will be debated in the House of Lords on Tuesday 11 December. The Bill will need to return to the Lords again before being considered for approval in the Commons at some point in the new year, dependent on Parliamentary time.

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Tuesday, 18 December 2018