The Draft Tenant Fees Bill and the Housing and Planning Act In this feature | ban on letting agents fees | rogue landlords database | enforcement action Renters bill of rights Cameron Crowe and Daniel Brayley look at the impact the Draft Tenant Fees Bill will have on tenants, landlords and trading standards A housing shortage in many parts of the UK has resulted in property prices rocketing, forcing many people out of the market and into private rented accommodation. Up until now, one of the big problems for tenants was the lack of transparency around letting agents fees. To an extent, this was addressed by section 83 of the Consumer Rights Act (CRA) 2015, which requires letting agents to publish their fees on their website if they have one and to display a list of their fees in a prominent place at their premises. Failure to comply could result in the local authority imposing a financial penalty of up to 5,000 on a letting agency. However, as many as 12 per cent of agents surveyed recently by Generation Rent did not meet this requirement, so there is clearly scope for increased monitoring by councils. Draft tenant Fees Bill CuRRENt LEgISLatION Where landlords and letting agents have engaged in misleading actions, misleading omissions, or aggressive or unfair commercial practices, the go-to legislation is still likely to be the Consumer protection from unfair trading Regulations 2008. Misleading actions include mis-stating the cost of rent in advertising, or giving inaccurate information about the particulars of a flat. Misleading omissions means the failure to set out fees or a limitation in respect of the premises. Aggressive commercial practices includes threatening evictions or entering the property without permission to discuss the late payment of rent. Unfair commercial practices can involve an agent pretending to be a signatory to a code of conduct when they are not, or falsely claiming a property is only available for a limited time. However, the growing trend towards alternative dispute resolution as a means of resolving consumer disputes and of The position in respect of letting agents fees in England is changing. On 1 November 2017, the government presented the Draft Tenant Fees Bill to parliament. The bill proposes to ban landlords and letting agents from requiring tenants to make any payments as a condition of their tenancy, with the exception of rent, a refundable tenancy deposit (capped at six weeks rent), a refundable holding deposit (capped at one weeks rent) and in-tenancy service charges for a service expressly requested by the tenant. The draft bill will also create a civil offence for an initial breach of the ban with a fine of 5,000 and a criminal offence when a person has been fined or convicted of the same offence within five years. Civil penalties of up to 30,000 can be issued as an alternative to prosecution. Trading standards is required to enforce the ban and to make provision for tenants to recover unlawfully charged fees. A ban on letting agents fees has already been introduced in Scotland without a significant increase in rents consumers resolving disputes themselves continues, with the Redress Schemes protecting renters for Lettings agency Work and property In theory, this is a significant step towards management Work (Requirement to Belong protecting tenants from excessive and to a Scheme etc) (England) Order 2014. This opaque letting agents fees. Predictably, the requires letting agents in England to belong to industry response was disparaging initially. a redress scheme. Local authorities should be In response to the announcement of the bill aware that an agents failure to belong to such in the Queens Speech, David Cox, the chief a scheme is enforceable by a fine of up to executive of the Association of Residential 5,000. Letting Agents (ARLA) Propertymark, said letting agents stood to lose around 200m in turnover, which could result in the loss of up to 4,000 jobs in the sector. He also said landlords may lose up to 3m and would seek to cover these costs by increasing rents. In response to the draft bill, however, Cox said he was pleased that the government has increased the proposed maximum security deposits from four to six weeks rent, and is encouraged that it appearstenants who wish to break their contract will have to cover the legitimate costs of finding a new tenant. In any event, the authors note that a ban on letting agents fees has already been introduced in Scotland, without a significant increase in rents. There appears to be a limit on what people are prepared and can afford to pay. Banning orders and databases This is a significant step towards protecting tenants from excessive and opaque letting agents fees The Housing and Planning Act 2016 CtSI RESpONDS introduces banning orders, which may Craig McClue, lead officer and policy prevent a landlord or property agent executive at CTSI, said: For the most part, from being involved in the letting and/or CTSI welcomes the Draft Tenant Fees Bill. management of property for at least Trading standards services are well placed to 12 months if they have been convicted of a enforce the ban on letting fees. Their in-depth relevant banning order offence. For example, local knowledge and existing relationships Housing Act 2004 offences relating to with landlords and letting agents in their the Management of Houses in Multiple area means they can communicate the Occupation, or illegally evicting a tenant new legislation more effectively and take contrary to the Protection from Eviction proportionate action where necessary. Act 1977. To get a banning order, the However, trading standards services have been stretched to breaking point following localauthority will have to apply to the unprecedented cuts in local government first-tier tribunal. funding, with some services seeing their staff The act also makes provision for a database levels fall by more than 50 per cent since 2010. of rogue landlords and letting agents those Additional funding is needed for services to convicted of a banning order offence, or carry out the necessary work on enforcing the whohave received two or more civil penalties ban. While the Bill acknowledges that trading as an alternative to prosecution for banning standards services will require additional order offences within a 12-month period. If support, the proposed solution which alandlord or agent has a banning order made suggests that funding for the enforcement against them, their details must be included in should come from the fines levied is the database, too. troubling. There simply isnt sufficient staff capacity among trading standards services This is clearly a positive step, but could be facing enforcement responsibilities across even more effective at protecting consumers more than 250 pieces of legislation to make if access was extended to the public and that effective. not limited to local housing authorities, the Department for Communities and Local Government, and HMRC, asplanned. It is not clear at this time when these measures in the Housing and Planning Act 2016 will come into force. Ultimately, though, the success of new, forthcoming and existing legislation will depend on robust and effective enforcement action by local councils in particular trading standards services and housing authorities. Cooperation and communication will be essential in ensuring the right option is used in the right case, and that rogue agents are not slipping through the gaps. Credits Cameron Crowe and Daniel Brayley are barristers at Gough Square Chambers. This article is based on a presentation given at CTSI Conference in June. Images: iStock.com / SvetaZi To share this page, in the toolbar click on You might also like Prosecuting by numbers November 2017