Senior solicitor Pippa Lee, in our Dispute Resolution team, outlines what landlords need to know about the Tenant Fees Act 2019.
The Tenant Fees Act 2019 (the Act) prohibits landlords and letting agents from charging tenants fees beyond those specifically permitted under the Act. From 1 June 2019 the Act will apply to all new and renewed tenancies which includes assured shorthold tenancies, licence agreements and student lets. The Act will also apply to existing agreements from 1 June 2020.
Under the Act landlords and letting agents will be prohibited from:
- Seeking tenancy deposits from tenants which exceed 5 weeks’ rent where the annual rent is less than £50,000, or 6 weeks’ rent where the annual rent is £50,000 or more.
- Taking holding deposits of more than 1 week’s rent. Also, holding deposits must be repaid to the tenant within 7 days of either: the tenancy agreement being entered into, the landlord deciding not to enter into the tenancy agreement, or the landlord and tenant failing to enter into a tenancy agreement before the agreed deadline.
- Charging an inflated/higher rent for an initial period of the tenancy in an attempt to recover letting fees. Although this does not prevent landlords charging a higher rent throughout the term of the tenancy agreement.
- Charging fees when the tenant defaults, except in the following circumstances: (1) a reasonable fee being charged for providing the tenant with replacement keys; (2) in the event that the tenant does not pay the rent within 14 days of the due date the landlord can seek to recover interest, which is limited to a rate of 3% per annum above the Bank of England base rate.
- Charging the tenant more than £50 (or justified reasonable costs) for dealing with a tenant request to vary, assign or novate the tenancy agreement.
- Charging fees for viewings, background checks, inventories, professional cleaning or anything else not expressly permitted by the Act.
If prohibited payments are made then landlords and letting agents should repay these to the tenant. If they do not do so, then tenants will be entitled to recover these from the landlord by applying to the First Tier Tribunal (Property Chamber).
Landlords will also be prevented from serving a notice pursuant to Section 21 of the Housing Act 1988 (a Section 21 Notice) on tenants to bring their tenancy to an end where prohibited payments have been made. Landlords will need to repay the monies to the tenants before being able to serve a valid Section 21 Notice.
Furthermore, a relevant enforcement authority (such as Trading Standards or the District Council) can impose a financial penalty on landlords and letting agents. For a first time offence of taking prohibited payments from tenants the enforcement authority has the discretion to impose a fine of up to £5,000, whereas repeat offenders could find themselves facing a criminal conviction and a fine of up to £30,000.
The intention of the Act is to protect Tenants from unexpected costs when entering into a tenancy agreement. The reduction of the costs of renting at the outset of the tenancy will come as a welcome relief to tenants. Landlords on the other hand will be considering other options for recovering the letting fees which they will now need to pay, which may result in higher rents.
For further information or legal advice, please contact firstname.lastname@example.org or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.