Landlords and Letting Agents Must Work With Tenants to Simplify Fees Ban

Landlords and letting agents that wait until the last minute to update their tenancy fees policies could cause confusion for their tenants, leading to needless complaints, warns PayProp.

The automated transaction and reconciliation platform has warned that by June 1st 2020, all tenancies will be covered by last year’s tenant fees ban, regardless of when they began. This means that deposits that exceed the limit, checkout fees and cleaning fees will all be illegal, in all circumstances.

However, due to a clause in the Tenant Fees Act, agents will not have to refund the difference between old deposit and new deposit limit unless the tenancy is renewed. Landlords and agents that continue to hold on to larger deposits, whilst not breaking the law, will be causing confusion for their tenants, who may choose to raise a complaint and subsequent investigation.

“There is likely to be confusion among tenants over the next few months. Until June 1, active tenancies are still subject to the old rules until their tenancy renews or the legislation is extended,” says Neil Cobbold, Chief Sales Officer of PayProp.

“This confusion could lead to consumers wrongly complaining to the redress schemes about agencies which are, in fact, acting lawfully.”

“However, now is the right time for landlords and letting agencies to make sure they have all their processes in place to ensure they are not overcharging renters and that they remain compliant with the Act,” he says.

A report recently published in the Times claimed that the two redress schemes – The Property Redress Scheme (PRS) and The Property Ombudsman (TPO) had received well over 200 complaints from consumers alleging that letting agents had tried to charge them illegal fees.

Cobbold says that some of these complaints could have come from tenants who didn’t understand why their deposit was still above the deposit cap or why they were still being charged certain fees.

“There is no indication of how many of these complaints were upheld by the redress schemes, so it’s hard to get a grasp on just how many agents have broken the law since the introduction of the fees ban,” he explains. 

Landlords and agents that cling to the old rules risk wasting resources when they are investigated and may also damage relationships with tenants. Letting agents and landlords must clearly explain to their tenants how much their deposit is and how it is compliant with the law. 

Cobbold continues: “By communicating to renters about deposits and fees going forward, agencies can reduce the chances of unnecessary complaints being made against them or their landlords,” he says.

“This could save time, protect relationships and allow agencies to focus on other important parts of their business.”

“As we move towards June, there is no excuse for agencies or landlords to be charging illegal fees or holding deposits on new and renewed tenancies that are above the cap, leaving themselves open to reputational damage or potential fines,” Cobbold concludes.