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Tenant fee ban - Savills

23 April 2019

1st June this year sees the introduction of the Tenant Fees Act. This will mean that any agency or landlord cannot charge fees to tenants for the likes of administrative costs, referencing, check-in’s and other associated tenant charges. Below are some implications for companies relocating their employees using ASTs

It’s common practice for most agents to take a weeks rent to show the tenants commitment to the property once offer is agreed. From the 1st of June agents and landlords will now be only allowed to take a “Holding Deposit” to secure the property which has to be returned or used towards landlord’s costs if the tenancy is not finalised within 15 days! (this can be increased if all parties agree in writing).

Tenants will no longer be charged for tenancy agreements unless they request the inclusion of specially negotiated clauses. To negotiate, agree and document special clauses agents are still allowed to charge, Savills fees will be £50 for the first special clause and £15 for any additional clause. This might have a great impact on companies with complex relocation processes especially when working with disadvantageous agreements.

Agencies and landlords will now be allowed to charge a maximum of 5 weeks’ deposit (for tenancies under £50k per annum, and 6 weeks for tenancies between £50-£100k per annum) regardless of tenants intentions. This may cause major issues for tenants looking to relocate with their pets when current industry standard deposits with pets were up to 8 weeks. The landlord and agent will not be allowed to accept higher a deposit or make any additional charges or exceptions for tenants therefore the industry is potentially expecting landlords to be looking at receiving higher rent in these situations.

These legislative changes will be applicable to AST’s and licences to occupy only, Company and non-housing act tenancies will continue as previously. Assumptions have been made regarding rents increasing as a result, we don’t believe the market will allow this outcome, but it is fair to say that this is another in a long list of changes that may drive private landlords out of the market and put their money elsewhere leaving future tenants with less properties to choose from.

Most of the legislative changes are positive for the industry and will limit unfair agents and landlords for charging unreasonable amounts of money for their administrative costs. Unfortunately some of them might put companies relocating their employees in unfavourable positions forcing them to pay higher rents and open up to new areas in order to find suitable accommodation for their employees.

Source - Savills

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