The punishments are part of the government’s proposals to ban letting agent fees and abuse of market power between tenant and landlord.
Proposals being published today also compel Rightmove, Zoopla and other property portals to be transparent and will force agents that handle client money to become members of client money protection schemes.
More than 4,700 responses were received by the government to its initial consultation on banning letting agent fees.
The vast majority of tenants (more than 90%) who responded backed the ban and 70% of them said these fees affected their ability to move into a new rented property.
The main policies proposed include:
- Cap holding deposits at no more than one week’s rent and security deposits at no more than six-weeks’ rent. The draft bill also sets out the proposed requirements on landlords and agents to return a holding deposit to a tenant;
- Create a civil offence with a fine of £5,000 for an initial breach of the ban on letting agent fees and creating a criminal offence where a person has been fined or convicted of the same offence within the last five years. Civil penalties of up to £30,000 can be issued as an alternative to prosecution;
- Require Trading Standards to enforce the ban and to make provision for tenants to be able to recover unlawfully charged fees;
- Appoint a lead enforcement authority in the lettings sector;
- Amend the Consumer Rights Act 2015 to specify that the letting agent transparency requirements should apply to property portals such as Rightmove and Zoopla.
Prevent double charging
The Department of Communities and Local Government (DCLG) said the changes would help improve transparency, affordability and competition in the private rental market.
“It will also prevent agents from double charging both tenants and landlords for the same services,” it added.
Communities secretary Sajid Javid said: “This government is determined to make sure the housing market works for everyone. Tenants should no longer be hit by surprise fees they may struggle to afford and should only be required to pay their rent alongside a refundable deposit.
“We’re delivering on our promise to ban letting agent fees, alongside other measures to make renting fairer and increase protection for renters.”
The ban on letting fees will apply to assured shorthold tenancies and licences to occupy in the private rented sector.
The consultation will run for six weeks from 1 November.