UK Tenant Fees Act: Impact on Relocation
Posted by: Chris Cole, Account Manager, EMEA.
A new Tenant Fees Act will take effect from 1 June 2019 which protects tenants in England from unfair letting fees and caps tenancy deposits at five weeks’ rent (six weeks if the annual rent is over £50,000). Landlords and letting agents typically position letting fees as costs to cover administrative and referencing tasks, but in recent years they have been deemed unreasonably high.
The new legislation aims to eradicate any hidden charges so that prospective tenants know exactly how much it will cost to secure a rental property. It is expected to save renters in England around £240 million a year, or up to £70 per household, and may make renting more accessible to those that previously could not afford to enter the rental market.
Protection Throughout the Tenancy
The Act not only protects tenants at the start of their tenancy, but throughout the time they are in rental accommodation. It states that landlords and letting agents must provide evidence of any reasonably incurred costs that they ask tenants to cover, which will prevent tenants from being charged inflated prices for damaged items. Should a tenant be charged unfairly, the timeframe by which landlords and letting agents must issue a refund will also be shorter under this new legislation.
Impact on Your Relocation Programme
Companies who cover rental costs for assignees as part of their UK relocation programmes will save money as they no longer will have to pay letting fees or inflated tenancy deposits. 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.
Assignees who let their property whilst on assignment should be mindful that they will have to pay the associated fees. So, for companies who have a policy in place that covers these fees, the new legislation will add additional costs.
If you have a UK relocation programme and wish to discuss the impact of the Tenant Fees Act, please contact your Cartus representative or email us at cartussolutionsEMEA@cartus.com.