The government outlined its legislative agenda for the next year with the Queen’s Speech at the State Opening of Parliament yesterday.
The main topic in the Queen’s Speech concerning landlords was the already awaited Draft Tenants’ Fees Bill.
The government is proposing a ban on landlords and agents from forcing tenants to pay extra letting fees.
Fees allowed will be: The rent, a capped security deposit which is refundable, a capped holding deposit which is also refundable, and tenant default fees.
Deposits are to be capped as follows: Holding deposit at no more than one week rent. Security deposit at no more than one month rent.
Measures will be put in place to police the ban on extra letting fees, and will allow tenants to recover unlawfully charged fees.
The extra letting fees ban is proposed to apply only in England.
The National Landlords Association (NLA) reacted to the new proposal for deposit caps in the Queen’s Speech.
Richard Lambert, CEO at the National Landlords Association (NLA), commented: ‘The decision to cap tenancy deposits at no more than one month’s rent smacks of a political gesture from a government desperate to court the voters who supported their opponents at the last general election.
‘We estimate that around 40 per cent of deposits exceed one month’s rent. Whilst capping them may reduce the move-in costs for some, it will increase the temptation for others to view the deposit as the last month’s rent, leaving landlords out of pocket at the end of the tenancy if, for example, the property has been damaged.
‘Some landlords use a higher deposit to give them the extra confidence they need when letting to higher risk tenants, so this could also have the unintended consequence of deterring them from offering their property to those likely to be struggling with affordability in the first place’.
The Queen’s Speech also mentioned the need to establish new immigration powers concerning EEA nationals after the repeal of the European Communities Act as part of Brexit.
This could involve changes to the Right to Rent scheme, but we will have to await further details.