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The Tenant Fees Act 2019 – What will it mean for me?

Posted on 10 April 2019 by Sasha Loveridge

The Tenant Fees Act 2019 – What will it mean for me?

New guidance has been issued on the Tenant Fees Act 2019 (“the Act”) which is due to come into force on 1 June 2019.

As of 1 June 2019, all new tenancies will be subject to the new rules. After June 2020 all tenancies will be subject to the new law. The rules will apply to all assured shorthold tenancies, tenancies of student accommodation and licences to occupy housing in the private rented sector in England.

The Act controls the payments that a landlord can charge in connection with a tenancy, and has specifically banned letting agents’ fees. In particular, landlords and their agents will be banned from charging for credit checks, inventories, guarantor fees, check out fees, administration fees and for references. Landlords are also now prohibited from charging for a professional clean at the end of the tenancy. There is still the possibility of deducting money from the deposit if the property is not left in a fit state and any repairs/maintenance is necessary – generally wear and tear is not sufficient.

 All tenant payments are now expressly prohibited unless they are classified as a “permitted payment” under the Act. Even most of the permitted payments are restricted.

 

Permitted Payments
Payment Restriction

Rent 

 
Refundable Tenancy Deposit

Capped at no more than 5 weeks rent if the annual rent is less than £50,000 or 6 weeks rent if the total annual rent is over £50,000.

The deposit must be protected within one of the three government backed schemes within 30 days.

Refundable Holding Deposit (to reserve a property)

Capped at a maximum of 1 week’s rent.

Must be returned in full within 7 days of either:
1. Entering the tenancy agreement
2. Withdrawing from the tenancy
3. The deadline passing for the tenancy agreement to be made.

Payments to change the tenancy when requested by the tenant Capped at £50 or “reasonable costs incurred” if higher than £50.

Payments associated with early termination of the tenancy when requested by the tenant
 
Capped at the landlord’s financial loss or the agent’s reasonable incurred costs in arranging for the tenant to leave early (if applicable).
Payments of utilities (gas, electricity, water), communication services, TV license and council tax.

Landlords are unable to overcharge for utilities under various legislation.

Landlords are unable to charge interest on a late payment of such a permitted fee unless the fee is included in the rent. 

Default fee for replacement of a lost/stolen key or security device  Cannot exceed the reasonable costs incurred by the landlord for replacement keys.
Default fee for late payment of rent Cannot exceed interest at more than 3% above the Bank of England’s annual percentage rate for each day that the payment is outstanding for late payment.

Penalties

What counts as a breach? Each prohibited payment that is requested counts as a breach.

A breach of the legislation will be a civil offence and can carry a fine of up to £5,000. If a further breach is committed, a landlord could face up to 5 years imprisonment.

If a further breach is committed by the landlord within 5 years of receiving a financial penalty or conviction for previous breach, this will be a criminal offence which carries an unlimited fine as a penalty. A financial penalty alone is not a criminal conviction.

Local authorities can impose a financial penalty of up to £30,000 when an offence is committed as an alternative to prosecution. The local authority will have discretion whether to prosecute or impose a financial penalty. Authorities are expected to develop and document their own policy on when to prosecute and when to issue financial penalties and have discretion when determining the appropriate level of penalty (within the limitations of the Act).

Please note: these new changes will have an impact on the eviction process under s.21 of the Housing Act 1988 – a landlord will be unable to evict a tenant under the s.21 procedure until/unless any unlawfully charged fees or an unlawfully retained holding deposit is returned.

Posted in: Lettings/Landlord & Tenant