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Tenant fee ban will not stop ‘hidden charges’

The government’s plan to introduce a ban on fees charged by landlords and letting agents is likely to come into force next year, but campaigners say new laws going through Parliament will not go far enough to stamp out all hidden fees and charges for renters.

The Tenant Fees Bill, introduced into Parliament in May of this year, has already reached the committee stage in the House of Lords, as part of the process of introducing a ban on letting fees and the majority of other upfront fees payable by tenants to rent a property in England.

The proposed new law will also lead to a cap on the amount of refundable security deposit a tenant would be required to pay to the value of six weeks’ rent and cap the amount of holding deposit a tenant could be required to put down to secure a property to the value of one week’s rent.


The government believes that the Bill will make renting properties in England fairer and more affordable for tenants by reducing the costs at the outset of a tenancy, at the same time as improving transparency and competition in the private rental market.

However, campaign groups, including Shelter and Generation Rent, have expressed concern that the abolition of fees will not stop all ‘hidden charges’.

The new rules will not prevent landlords and letting agents from charging default fees, such as cleaning costs or those for repairs.

But while it is reasonable for landlords to make certain deductions from a deposit when necessary, Shelter argues that tenants are routinely being overcharged.

To help avoid tenant deposit disputes, Jon Notley, CEO & co-founder of Zero Deposit, is trying to encourage more letting agents, landlords and tenants to sign up to deposit replacement products, in the form of insurance, which he argues reduces financial pressures on renters, while also offering greater security to landlords.

He commented: “Although legislation to ban administration fees for tenants is on its way, it’s important to note that the largest cost faced by tenants is not usually the fee charged by a letting agent, but the size of the security deposit which costs on average, £1,110.

“Recent Nationwide data also showed that for more than a fifth of tenants surveyed, it took over three months to have their deposits returned, meaning many people struggle to move between properties.  As such, it’s crucial that the barriers to renting evolve and become flexible and fair for both landlord and tenant.

“FCA-regulated deposit replacement products, like Zero Deposit, which address both the affordability problem for tenants whilst providing landlords with all of the protections of a cash deposit, could be one solution. It’s important that the government recognises this and looks at how it can change the 2004 Housing Act to allow for free-market solutions.

“Ultimately, it is essential that there is complete transparency when it comes to deposit monies – legislation needs to address this so that both tenant and landlord are protected.”

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  • jeremy clarke

    Hey tenants, if you don't break things and if you clean properly there will be no issues! How difficult is that?

  • icon

    For us here in Wales, not unsurprisingly, the WAG has an even more daunting proposal on letting fees, with unlimited fines for non-compliance.
    You can always rely on the Socialist 'trough feeders' in Cardiff Bay to come up with a more onerous regime when it comes to the hated property owning classes.
    Unfortunately, it will fall on us landlords to pay for fees that are charged to tenants by the letting companies.
    It may therefore be prudent to by-pass the agents and carry out the work that they do, ourselves?
    I use them on a 'tenant find' basis only, so am not quite sure how that will affect me.

  • Chris JaiBahadur

    It will affect Landlords who require the tenant find service. It will affect them in their pockets once the referencing fee ban kicks in.
    We charge £400 for tenant find, which includes marketing, viewings and drawing up the contracts, contacting the utility companies everything except the inventory. once the referencing ban kicks in I am certainly not going to cover the fee.

  • icon

    These charges will be built into increased rent, further more landlords and agents will not be holding properties for tenants, it will be a contract race, first to sign and pay their money over gets, lets see how tenants like that one.


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