According to lettings payment automation provider, Payprop, confusion among renters over the complex Tenant Fees Act legislation could lead to a rise in complaints to redress schemes in the coming weeks and months.
The firm says that while most tenants will be aware of the fees ban, many will not fully understand the nuances of the Tenant Fees Act and what it means for them.
Tenant Fees Act to be extended in June
From June 1 2020, will cover all tenancies, irrespective of when they were signed. That means any tenancy clauses that contain checkout fees are unenforceable and agents that charge them could be breaking the law.
However, there could also be confusion over deposits. While new or renewed tenancies are unable to hold deposits over the 5- or 6- week limit, agents will not have to refund the difference unless the tenancy renews. Those tenants who remain on contractual periodic tenancies will continue with the same insured/custodial deposit which will not need to be adjusted by or after June 1 2020.
Neil Cobbold, Chief Sales Officer of PayProp, comments: "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. 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."
Some fees ban complaints could be unnecessary
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.
He explains: "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. However, under 250 complaints is a relatively small number when one considers that the PRS and TPO represent thousands of letting agencies across England."
Raising awareness of June law change will be crucial
Cobbold adds that in the run-up to the extension of the Tenant Fees Act on June 1, letting agencies will play a key role in explaining to tenants how the legislation works and what it means for them.
He says: "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. 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."