On the 1st June 2019 the above Act came into force across England and introduced fundamental changes to the fees and charges that landlords, and/or letting agents, can seek to recover from a tenant.
In essence, the Act bans all payments from a tenant in association with renting a residential property, unless they are expressly permitted by the Act. We have highlighted the main points from the Act below.
To which Tenancies does the Act apply, and from when?
The Act applies to all new Assured Shorthold Tenancies, student accommodation and licences to occupy private residential property in England from 1st June 2019
The Act will also apply to all existing Assured Shorthold Tenancies, where they become Statutory Periodic Tenancies during the next 12 months, from 1st June 2020.
What are the permitted payments?
- The rent payments must be split equally across the tenancy.
- The rent cannot be artificially increased in the first month, and then revert to a lower amount for the subsequent months of the tenancy.
- The rent must be fair, and in line with other properties in the area.
- Tenancy Deposit
- Refundable tenancy deposits have been capped at a maximum of 5 weeks rent (if the rent is less than £50,000 per annum)
- The refundable deposit has been capped at 6 weeks rent, for all tenancies with a rent of £50,000 per annum or more
- Utility Costs
- Actual utility costs associated with the tenant living in the property – electric, oil gas etc
- Council tax and sewerage charges in relation to the property
- Any communication and satellite television services
4. Holding Deposits
The Act does allow for Holding deposits, of 1 weeks rent. However, there are a number of restrictions associated with the Holding deposit:
- This must be refunded to the tenant, unless the tenant withdraws, fails the ‘Right To Rent Checks’, or provides false information
- The Holding deposit can only be held for 14 days
- It must be repaid to the tenant within 7 days of the tenancy being entered into, or the landlord withdrawing
- A clear written statement must be provided to the tenant, confirming why the Holding deposit is being taken, and the circumstances in which it will be used.
5. Default Fees
Default fees can be charged to a tenant, should the tenant breach the terms of the tenancy. However, the Act restricts these fees as follows:
- Loss of key or other security devices - Actual cost of replacement keys or security device only, and a written cost providing to the tenant
- Failure to pay rent within 14 days of the due date. After 14 days interest may be charged, but it has been capped at a maximum of 3% above the base rate of the Bank of England
- Damages – A landlord can claim for damages for a breach of the Tenancy Agreement, provided there is sufficient supporting evidence supplied to the tenant.
6. Assignment/Variation of a Tenancy or Early Termination
- Any fee for amending a Tenancy Agreement, if a request by the tenant, is limited to £50 inclusive of VAT.
- For agreeing early termination of a tenancy, the tenant would only be liable for ‘actual’ losses incurred by the landlord (ie any rent due under the tenancy should early termination be granted)
Examples of Prohibited Payments/Fees
- Tenancy Agreement fees
- Reference and Credit Check charges
- Inventory and check out fees
- Requesting professional cleaning at the end of a tenancy
- Requesting chimney sweeping
- Requesting pool opening and closing
- Requesting gardening contractors to maintain grounds
- Where the Tenancy Agreement contains a clause requiring the tenant to pay a prohibited payment, the relevant provision will not be binding.
- Where a fee or charge has been made to a tenant, they are entitled to reimbursement of this fee or charge, together with interest If this is not returned, a tenant can apply for a First-tier Tribunal to recover the sums charged.
- Landlords will be restricted from serving notice to their tenant, until any prohibited payment has been repaid.
- Trading Standards will be responsible for enforcing breaches of the Act. Each breach will be a civil offence, and carry a financial penalty of £5,000. However, if further breaches occur within 5 years of the previous offence, a landlord may be fined anything up to £30,000, face criminal prosecution, or be subject to a Banning Order, preventing them from letting any property for a year.
If you require any further information regarding the Tenants Fees Act 2019, do not hesitate to contact our Lettings Department on 01993 822325 or Property Management Department on 01285 883740.