Letting agents might still be able to charge for tenancy renewals one last time even after the fees ban starts, ARLA boss David Cox claims.
However, the ARLA boss said he is calling for more clarity to avoid a “PPI moment”, a reference to the millions that have had to be refunded in the mis-selling scandal in the financial sector.
Speaking at Rightmove’s Legislation Live event yesterday, he told agents that the Draft Tenant Fees Bill allows for transitional provisions, meaning that existing contracts before the ban will still be legal.
He said this means if a tenancy agreement signed before the ban contains a charge for renewal, this could still legally be charged even if the contract ends after the ban comes in.
However, any new tenancy agreement written after the ban could not include such charges.
Cox said the transitional provisions will also help agents in the student lettings market as they could still legally charge fees to those who are signing agreements in the coming months even if they end up moving in during the next academic year in October when a fee ban is expected to be in place.
However, he warned that the Secretary of State has powers to change these provisions and told agents it is important to keep up to date with the legislation.
Cox is also calling for more “regulatory certainty” over charges for breach of tenancy. He says the Bill suggests charges for breaking the tenancy agreement would be allowed, but he told the conference, and later confirmed to EYE, that this had to be made clear to stop later claims against agents similar to the payment protection insurance scandal.
Cox said: “We are asking for regulatory certainty to avoid an industry PPI moment.
“On something as fundamental as breach of contract, there should be provisions to give legislative certainty.
“A default clause is commonplace in all other contractual agreements.”
He recommended agents to prepare for the ban to come in during next October, but said it may not actually be until April 2019 due to other issues such as Brexit.
Cox also suggested agents flip who pays for inventory check-in and check-out as it will be illegal to charge tenants an exit fee once the ban comes in.
Meanwhile, NAEA chief executive Mark Hayward told agents at the conference that Trading Standards was becoming more concerned about compliance with consumer protection regulations.
He said agents must be more transparent and ensure all property information is disclosed, particularly when it comes to leaseholds due to ongoing concerns over ground rent charges.
Hayward also said officials such as those from HMRC and the National Crime Agency wanted to see better anti-money laundering compliance and more use of suspicious activity reports.
He said: “The housing minister has a desire for more transparency.
“Life in terms of legislation is going to get tougher.”