Tenant fees ban came into effect on 1 June 2019
The Tenant Fees Act 2019 came into effect on 1 June 2019. This prohibits landlords and letting agents from charging fees to tenants, unless they are permitted under Schedule 1 of the Act. There are also new rules about holding deposits for tenants that also came into effect on 1 June 2019.
Permitted payments under the Act include:
• Rent (and you cannot charge a higher rent at the start of the tenancy and then lower it);
• Tenancy deposit (but this will have to be no more than 5 weeks’ rent, or 6 weeks if the annual rent is higher than £50,000);
• Holding deposit (no more than 1 weeks’ rent, there is a cooling off period of at least 14 days during which the deposit is repayable in certain circumstances, and it is not permitted to take a holding deposit if a previous holding deposit in relation to the same property has not been repaid);
• Fees for contractually specified “defaults”, such as lost keys (the charge must be reasonable and supported by written evidence which must be provided to the tenant);
• Damages for breach of the tenancy agreement (this will also relate to the losses suffered, and should be reasonable in amount);
• Costs relating to variation, assignment, or novation of the tenancy (not to exceed £50 or the reasonable cost of the work);
• Costs of early termination of tenancy (i.e. before the end of the fixed period, or without the required notice in a periodic tenancy. Again, the amount is restricted to the actual loss suffered);
• Payment of utilities, television licence, or internet/landline if the tenancy agreement requires that payment to be made.
Should a tenant be charged a prohibited fee, then the landlord and/or letting agent could be liable to a fine of up to £30,000. It is important to ensure that your agent is aware of the change in the rules, and is taking steps to ensure that they are not being broken.
In the meantime, (non-exhaustive) practical tips for landlords include:
• Review your tenancy agreements to see whether they allow any or all of the permitted payments – if they do not, consider how and if you are going to change the tenancy agreement to allow for those payments to be made (usually at the end of the fixed term by agreement, or on the commencement of new tenancies);
• Speak to your letting agent to see what they intend to do in relation to the tenant fee ban;
• Review your revenue streams to see whether you will be adversely affected.
This article is not a substitute for independent legal advice, and is provided as a guide only. If you are unsure of your legal position, you should seek specialist advice straight away.