On the 1 June 2019, the Tenant Fees Act 2019 (‘the Act’) came into force which heralded big changes for landlords and tenants in respect of payments that landlords (or letting agents) can charge to tenants and the treatment of a tenant’s holding deposit.
The new legislation applies to all new agreements entered in to on or after the 1 June 2019, and as of 1 June 2020, the legislation will apply to all agreements (including pre-June 2019 agreements.)
What Fees can a Landlord charge a Tenant?
If you have granted an Assured Shorthold Tenancy, a student let or a licence to occupy (with the exception of social housing, long leases and holiday lets) you are now only allowed to charge the tenant the following fees:
- A refundable tenancy deposit capped at no more than 5 weeks’ rent where the total annual rent is less than £50,000, or 6 weeks’ rent where the total annual rent is £50,000 or above
- A refundable holding deposit (to reserve a property) capped at no more than 1 week’s rent
- Payments associated with early termination of the tenancy, when requested by the tenant
- Payments in respect of utilities, communication services, TV licence and Council Tax
- A default fee for late payment of rent and replacement of a lost key/security device giving access to the housing, where required under a tenancy agreement
It is now unlawful to charge tenants:
- Tenancy set-up fees
- Viewing fees
- Credit-check fees
- Inventory check fees
- Check-out fees
- Fees for professional cleaning services
Repayment of the Holding Deposit
The Act also contains strict provisions in relation to the repayment of the holding deposit and if a Landlord is of the view that they fall in to one of the exceptions to repay the deposit, they must notify the payee in writing stating the reason why the deposit should not be repaid. The Act also provides time limits for the written notice to be given by.
What happens if a Landlord charges a prohibited payment or fails to repay the deposit in accordance with the Act?
If a Landlord charges a tenant a prohibited payment or fails to meet their repayment obligations Landlords could face financial penalties between £5,000-£30,000 or criminal prosecution. Tenants can also bring an action against the Landlord to recover the payment or the deposit and the Landlord will be unable to serve a valid section 21 notice on the tenant until the Landlord has repaid the monies to the tenant.
The new legislation is good news for tenants but Landlords and letting agents should exercise caution in relation to the new rules.
If you would like more information in relation to this article, please get in touch with Danielle Dyer, a solicitor in BakerLaw’s Dispute Resolution team.
This article is not a definitive statement of the law. It is designed as a free update on the law at the time of publishing. It is not a substitute for legal advice on specific facts and circumstances. BakerLaw LLP and/or the writer accepts no liability or responsibility for reliance on this article and recommends that you seek independent legal advice on your specific circumstances prior to taking any steps.