Citizens Advice has warned that a government pledge to ban tenants fees in England and prevent unfair practices risks being fundamentally undermined by a bill allowing ‘default fees’.
The charity has claimed that unscrupulous landlords and letting agents could still hit renters with unfair charges by exploiting a loophole clause in the Tenant Fees Bill, which is set to be debated in Parliament today.
The default fees clause was included to allow landlords to charge for tenancy breaches, such as late rent or to replace lost keys, but currently there are no restrictions on what a default could be.
The government has said it will issue guidance on when and how a default fee can be charged, but this would not be legally enforceable.
Citizens Advice wants the government to close the loophole by including a clearer definition of when a default fee is legitimate and writing this into law.
This will also benefit landlords by providing a clearer steer on the rules and stop rogue landlords and agents who are prepared to abuse the clause from gaining an advantage, the charity said.
The national charity also wants the bill to be amended so that security deposits are capped at four-weeks rent, rather than the planned six weeks.
Renters have paid £235 million in unfair and uncompetitive fees since the government promised to ban them in November 2016 – a rate of £13 million a month.
Gillian Guy, chief executive of Citizens Advice, said: “The government’s pledge to ban fees will be fundamentally undermined unless the clause on default fees is significantly tightened.
“The loophole leaves tenants vulnerable to rogue landlords and agents looking to continue charging unfair fees.
“The government must tighten this clause and issue a clearer definition of what a default fee is. Leaving this just to guidance risks poor outcomes for both renters and landlords.”