The Tenant Fees Act gained Royal Assent earlier this week and will become Law in England on the 1st June 2019. Full details of the Act will be released shortly, however below is a brief overview of what we expect the regulations to entail, going forward.
From 1st June 2019, new tenants (or existing tenants who renew a tenancy) will only be required to pay for:
- A deposit
- A holding deposit (if applicable)
- Actual incurred utility costs (including Council Tax and Television Licence)
- Any mid tenancy changes to a tenancy, at a tenants request
- Damages incurred due to breach of the tenancy
- Any interest arising out of a tenant’s failure to pay rent on time (should the rent be in excess of 14 days overdue)
Excluded Fees & Costs
From 1st June 2019, Tenants, or persons acting on a Tenants behalf i.e. guarantor will not be required to pay for costs or charges made as a condition of the granting, assignment, termination or renewal of the tenancy. These include, but not limited to the following;
Any current clauses in a tenancy agreement which requests a tenant pay a prohibited fee or cost, will become unenforceable under the new legislation.
Deposits are to be capped at the equivalent of 5 weeks rent (for all tenancies with an annual rent of below £50,000) and must continue to be Registered in a certified Tenancy Deposit Scheme. Should the rent be in excess of £50,000 per annum, the deposit has been capped at the equivalent of 6 weeks rent.
These, if charged by an agent or Landlord, under the legislation will be capped at a maximum of 1 weeks rent and will require to be refunded to tenants:
Within 7 days of the tenancy agreement being completed (if not applied to the actual Tenancy Deposit),
Within 15 days of the deposit being taken if the agreement is not completed for reasons within the landlord’s control.
The holding deposit will not have to be refunded if:
- The tenant has no Right to Rent under the Immigration Act
- If the tenant fails to enter the tenancy agreement
- If the tenant provides misleading information affecting their suitability to rent the property.
As mentioned above, there are some permitted costs which can be charged to a tenant, however, there are caps on some of these;
- A change or early termination of a tenancy when requested by the tenant – to be capped at a maximum of £50.
- Utilities, communication services and Council Tax – restricted to actual costs incurred
- Payment of damages where the tenant has breached terms in their tenancy agreement – with proof provided of actual cost to repair damage
- Payments arising from a default by the tenant where they have had to replace keys or a respective security device – restricted again to proving actual cost with receipts.
- Any interest applied for late rent payment of rent is to be capped at 3% above the bank of England base rate.
Fines for Breaches of the Act
Firstly, it should be noted, that if a prohibited payment has been made, the Landlord will not be able to recover possession under a Section 21 Notice of the Housing Act 1988, unless the prohibited payment has been repaid to the tenant. This will also apply where a landlord has breached the conditions applied to the taking of holding deposits.
Where it is found that a breach of the regulations has occurred, tenants will be able to get any money back via the county court. A Landlord and or Agent may also be charged interest on this from the day that the payment was taken.
In addition to this, landlords and or the agents, can be fined £5,000 for an initial breach of the ban. Any further breaches are criminal offences and a landlord and or agent can be fined up to £30,000 as a civil penalty – together with being subject to a banning order.
Further information will be sent out to all our Landlords, once we have finer details.
For further information please contact either:
Vanessa Carter: 01993 825738 or,
Hennie Hargreaves: 01285 883740.