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Letting Fees - ban comes in to force today

Two-and-a-half years after the plan was first announced, a ban on fees charged by lettings agents to tenants in England has started.

The new law does not mean tenants will not have to pay any upfront fees at all but will still be expected to pay the first month's rent, and a deposit.

There is now a rule which means security deposits will be limited to five weeks' worth of rent for properties costing less than £50,000 annually to rent, or six weeks for higher-value renting. Holding deposits are capped at one week's rent.

There can be a charge for a lost key replacement, at close to the cost to the landlords themselves.

If rent is outstanding for more than 14 days, then agencies can impose a penalty limited to 3% higher than the Bank of England's base rate, which is 0.75% at present.

There might also be a fee of about £50 if a tenant requests a change to the tenancy, and also one if a tenant wants to leave the contract early.

Those who signed a tenancy agreement before 1 June may still face fees in their contract for the next 12 months, including renewal fees.

Leona Leung, a landlord and lettings agency manager, said that agents would have to cover their cost and pass this on to the landlords. This could then be handed on to tenants in higher rent.

Ms Leung said that other tax changes, such as the Insurance Premium Tax, had hit landlords - meaning that they were already facing tough cost pressures. All but the biggest companies could decide to self-manage their property or sell up.

"Many landlords will be asking whether it is a feasible business." she said.

"The small landlords and local agents could be out of the business very soon. It is a loss for everyone - tenants, landlords and agents."

Many agents are unhappy that they are facing higher costs as a result of overcharging by the unscrupulous few in the past.

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