England: MPs recommend banning landlord fees and capping security deposits

A committee of MPs has recommended banning fees imposed on tenants by landlords and lettings agents in the private rented sector in England, and capping security deposits at the equivalent of five weeks’ rent.

The housing, communities and local government committee has published its report on the Tenant Fees Bill, which is currently making its way through Westminster.

The draft bill proposes prohibiting all payments with the exception of rent, security deposits of up to six weeks’ rent, holding deposits of up to one week’s rent, and default fees.

The committee’s report Bill welcomes the aims of the proposals but recommends the maximum amount that can be charged as a security deposit be lowered from the proposed six weeks’ worth of rent and calls for more funding for enforcement.

Among its recommendations are:

  • Security deposits should be capped at the equivalent of five weeks’ rent in recognition that finding six weeks’ worth of rent can cause financial difficulties for tenants.
  • Landlords should not be able to retain the full holding deposit if a tenant fails a reference check despite providing accurate information.
  • Default fees are open to abuse so the type and amount of default fee needs to be better regulated
  • Additional funding should be made available to local authorities to enforce the legislation.
  • Impact Assessments should be published alongside every draft Bill

Clive Betts MP, chair of the housing, communities and local government committee, said: “With more and more people living in the private rented sector, this legislation has the potential to make a difference to millions of people by cracking down on unfair fees and saving tenants hundreds of pounds.

“We believe however that there are clear improvements that could be made to the Bill that would ensure it has a much better chance of delivering on its aim of making renting fairer and easier.

“Moving home is already an expensive time and many people struggle to find large sums of money at the start of their tenancies to put down as a deposit.

“Lowering the cap from six weeks’ worth of rent to five will help make the private rented sector much more affordable, while also keeping protection for landlords from rogue tenants.

“We also had concerns about how the law will be enforced. Funding enforcement through the retention of fines gives local authorities a perverse disincentive to proactively engage with lettings agents and landlords.

“If councils are to be given this extra enforcement responsibility, they must either be given extra resources or the maximum amount of civil penalty needs to be increased.”