August 1, 2017

How the Proposed Ban on UK Tenancy Fees Affects Your Relocation Programme

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Aug

01

How the Proposed Ban on UK Tenancy Fees Affects Your Relocation Programme

Posted by: Kim Clarke, Client Services Director

A new Tenants’ Fee Bill has been announced by the UK Government which bans letting agents from charging tenants in England a fee as a condition of their tenancy. Such charges are typically positioned by letting agents as fees to cover administrative and referencing costs. In recent years however, tenants’ fees have not been deemed reasonable, with some agents overcharging.

According to government figures, it is estimated that the average UK tenants’ fee is £223, which impacts an estimated 4.3 million households each year. Although the legislation is yet to be finalised, once the Tenants’ Fee Bill becomes law the UK landlords will have to pay the fees themselves.

The new bill was announced during the Queen’s Speech in Parliament on 21 June 2017, which traditionally takes place after a new Government is formed and outlines what the Government’s priorities are for the coming year. It is expected that the Bill will become law in the next 12 months.

Recovering Fees

The proposed legislation also states that there will be measures to allow tenants in England to recover unlawfully charged fees from letting agents. Although it is not yet clear whether this will apply to fees levied before the ban, or those illegally charged once the ban is in place. 

Impact on Your Relocation Programme

This new legislation may positively impact companies with UK relocation programmes as they will no longer have to pay tenants’ fees for assignees securing rental accommodation. However, as landlords will now be expected to pay the fees themselves, it has been suggested that they will find other ways to offset the cost onto tenants, e.g., increasing rents or management charges.

Assignees who are letting their property in England whilst on assignment will also have to pay the associated fees. Should companies have a policy that covers these fees, then this new bill will cause additional costs. 

Going Forward

Once the Tenants’ Fee Bill becomes law, we will provide you with an update on the potential impact to your UK relocation programme. In the meantime, if you have any questions please contact your Cartus representative, or email us at trustedguidanceEMEA@cartus.com.

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Posted By

Kim Clarke

About Kim

Kim has been with Cartus for over 17 years. Based in EMEA, Kim has experience of managing a diverse client base from emerging market to large engagements, which has provided her with a broad perspective on global mobility practices.

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