Tenant Fee Ban - The Facts

The introduction of the Tenant Fees Act on the 1st June 2019 means that a number of fees that were previously charged by landlords and letting agents have now been prohibited. The Tenant Fees Act applies to all Assured Shorthold Tenancies (AST) and Licences in the private rental sector for England. Whilst the Act comes into effect for new tenancies entered into from the 1st June 2019, for tenancies that started before this date, there is some leeway for landlords, but the rules will apply in full by 1st June 2020.  

What Fees Can No Longer Be Charged?

The first thing that can no longer be charged for is an Admin Fee. Usually this fee was applied to ensure only serious prospective tenants applied for properties and it covered things such as the cost for setting up the tenancy, obtaining references and credit checks and preparation of tenancy documentation.  These costs must now be covered by the landlord. 

Landlords/agents are also no longer allowed to charge a fee for obtaining a guarantor, charges for weekend or evening check –ins or check out fees. They cannot charge for letters sent chasing rent payments or for bank charges for late payment of rent/missed rental payments.   Landlords can no longer charge however much holding deposit or reservation fee that they feel like and there are restrictions on the amount of security deposit they can take..

 What Can Landlords Still Charge?

The main charges that landlords can still legally apply are the rent, a deposit, and a holding deposit (an amount charged while the tenancy is being arranged).

The Act also stipulates the amount that can be charged for the deposits:

·         Security deposit: No more than the equivalent of 5 weeks’ rent (if the annual rent is over £50,000, however, this rises to 6 weeks rent).  This means that if the Tenant wants a pet, the landlord cannot charge an additional pet deposit if they are already taking the maximum 5 weeks deposit as the main security deposit.

·         Holding deposit: No more than the equivalent of 1 weeks’ rent. Once the tenancy agreement has been signed this must be returned to the tenant- which is usually done by way of crediting it towards the first month’s rent or the security deposit. Whilst a holding deposit is in place, a landlord cannot advertise the property or take more than one holding deposit.

There are a few other areas where a landlord can charge the tenant and these are as follows:

·         Interest on late payment of rent at 3% above Bank of England base rate where the rent is more than 14 days late.

·         Lost keys and other security devices – plus a small charge for the time involved in replacing them – not to exceed £15.00 per hour inclusive of VAT.

·         Variation of contract at tenants request and if agreed by landlord up to £50.00 including VAT.

·         Change of tenant/sharer at tenants request and if agreed by landlord. Up to £50.00 inclusive of VAT.

·         Early release from tenancy at tenants request and if agreed by landlord. The landlord may charge the following:

 

i)                    Rent up to the date on which the premises are re-let or the expiration of the tenancy agreement, whichever is the sooner

ii)                   Council tax, water rates, gas and electricity charges along with any other bills which are your responsibility under the tenancy agreement up to the date the premises are re-let, or the expiration of the tenancy agreement, whichever is the sooner

iii)                 A charge, if appropriate, for the landlord’s costs for re letting the property and which costs cannot exceed the maximum of the outstanding rent for the rest of the tenancy.

 

Landlords can still charge the following during the tenancy:

Utilities – gas, electricity, water and sewerage

Communications – telephone and broadband.

Installation of cable/satellite.

Subscription to cable/satellite supplier.

Television licence.

Council Tax.


12 Month Grace Period for Existing Tenancies

If the tenancy was entered into before 1st June 2019, landlords will still be able to charge banned fees if they have been included in the tenancy agreement. However the Tenant Fees Act will apply to most tenancies from 1st June 2020.

What Are the Penalties?

If you are and found to be in breach of the Tenant Fees Act you can be fined up to £5,000  per breach. At this point the offence will be treated as a civil matter. If you commit another breach within five years of this you could be fined up to £30,000.00 and this will be considered a criminal offence.

If, as a Landlord, you have concerns about the Tenant Fee Act and how it affects you, you can talk to one of our local property experts. We have branches across the country, you can locate your nearest Northwood Branch here
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