TENANT FEES ACT 2019

Tenant Fees Act (2019)

The Tenant Fees Act came into force on 01 June 2019.  At the centre of the new laws is a ban on tenant fees, including admin and agency fees. From 01 June 2019, it will be illegal for landlords and agents to charge tenants for referencing, inventories, and administration fees.

What’s in the Act?

1. All Payments Prohibited Except Rent, Deposits and three permitted payments: (Landlords or their agents will no longer be allowed to charge tenants for anything except: the rent, the tenancy deposit and a holding deposit) Anything else is a ‘prohibited payment’. This means youwill no longer be allowed to ask tenants to cover the cost of their own referencing. You also won’t be able to charge check-in, inventory or admin fees.

2. Only 3 permitted payments: (Late rent fees, lost keys and changes to tenancy) These clauses must be written into the tenancy agreement to be able to charge tenants these fees while the tenancy is in progress.

3. Permitted payments:

Before the tenancy starts (payable to Hampton-Heath ‘the Agent’)

• As well as paying the rent, tenants may also be required to make the following permitted payments.

• Holding Deposit: 1 week’s rent(a holding deposit is a payment made by the tenant to reserve a property. (See 7 & 8 below)

• Tenancy Deposit: 5-week weeks’ rent where the annual rent is less than £50,000; or six weeks’ rent where the annual rent is £50,000 or more

4. During the tenancy (Payable to the Landlord or Agent):

(a) Late Rent Fees

• Payment of interest for the late payment of rent at a rate of 3% plus the Bank of England’s base interest rate(For Example, 3% plus the base rate of interest for each day that the payment has been outstanding after 14 days)

(b) Lost Keys

• Payment of £ TBC for the reasonably incurred costs for the loss of keys/security devices. Tenants will be charged for losing their keys (or other security device if your property is high-tech). (For Example, a charge of £5 to replace a lost key if a receipt can be produced for £5 for getting a new key cut. Evidence of the cost will be provided.

(c) Changes to Tenancy

• Payment of up to £50.00 if you want to change the tenancy agreement (For Example, adding a new tenant to the tenancy or allowing a pet)

5. During the tenancy (payable to the provider) if permitted and applicable:

• Utilities – gas, electricity, water
• Communications – telephone and broadband
• Installation of cable/satellite
• Subscription to cable/satellite supplier
• Television licence
• Council Tax

6. Other permitted payments:

Any other permitted payments, not included above, under the Tenant Fees Act 2019 including contractual damages.

7. New Rules on Holding Deposits:

The Act includes new rules about how holding deposits must be treated.

• The holding deposit must be returned to the tenant: either in payment back to the tenant, or being put towards the first rental payment, or the security deposit.

There are some exceptions. In these cases, that holding deposits paid by the tenant can be forfeited:

• The tenant withdraws
• The tenant doesn’t take all reasonable steps to enter the tenancy
• The tenant fails a right to rent check
• The tenant provides misleading or fraudulent information which materially affects their suitability to rent the property

8. Repayment of Holding Deposits:

• Landlords and agents will only be able to hold the holding deposit for 15 days unless another ‘deadline’ date is agree in writing.
• After the deadline, the holding deposit must be repaid within 7 days according to the above rules (see 7)
• The holding deposit can be repaid to the tenant, or it can be put towards the rent or tenancy deposit.

9. Is your current tenancy deposit more than Five Weeks’ Rent:

Do I Need to Return Part of the Tenancy Deposit after 1st June 2019? Yes, if you renew the tenancy, you will need to make sure any tenancy deposit does not exceed the maximum amount of five weeks’ rent. The rules will apply to all existing tenancies from 1st June 2020. So, if this tenancy runs past 1st June 2020, then you will need to make sure the tenancy deposit is less than the maximum five weeks’ rent before that date. You can do this by returning the excess to the tenant.

What Are the Penalties to Landlords or agentswho charge Tenant Fees?

Landlord (or agents) who charge illegal fees will face paying huge fines.

• The first offence would be a civil offence, with a fine of £5,000.
• If the offence is repeated within five years, there would be either a criminal offence or a fine of £30,000.
• There are also plans to help tenants recoup any illegal fees they paid from the landlord (or agent).
• Local Trading Standards organisations will enforce the ban.

Further info can be found at: https://www.gov.uk/government/publications/tenant-fees-act-2019-guidance

Disclaimer

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.