TENANT FEE BAN

In just over one week the “Tenant Fees Act 2019” becomes law on the 1^st June 2019.

About the ban

Please note: this guidance applies to England only.

What fees can I ask a tenant to pay? You cannot require a tenant (or anyone acting on their behalf or guaranteeing their rent) to make certain payments in connection with a tenancy. You cannot require them to enter a contract with a third party or make a loan in connection with a tenancy. The only payments you can charge in connection with a tenancy are:

a) the rent

b) a refundable tenancy deposit capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above

c) a refundable holding deposit (to reserve a property) capped at no more than one week’s rent

d) payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher

e) payments associated with early termination of the tenancy, when requested by the tenant

 f) payments in respect of utilities, communication services, TV licence and council tax; and

 g) A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement

If the fee you are charging is not on this list, it is a prohibited payment and you should not charge it. A prohibited payment is a payment outlawed under the ban.

When does the ban apply?

It depends on when a tenancy agreement was entered into. The ban is being introduced in two stages.

1.       From 1 June 2019, if you enter into a tenancy agreement, student let or licence to occupy housing in the private rented sector, you will be prohibited from charging any fees or other payments that are not included in the list of permitted payments above.

Landlords will be responsible for the costs associated with setting up, renewing or ending a tenancy (i.e. referencing, administration, inventory, renewal and check-out fees). Agents and landlords do not have to pay back any fees that have been charged to a tenant before 1 June 2019.

Where a tenancy agreement was entered into before 1 June 2019, you will still be able to charge fees until 31 May 2020, but only where these are required under an existing tenancy agreement. This might include, for example, fees to renew a fixed-term agreement where a tenant had already agreed to pay these. However, you should consider whether it is necessary to charge in such instances. Where fees are charged, businesses such as letting agents are prohibited from setting unfair terms or fees under existing consumer protection legislation.

2.       From 1 June 2020, the ban on fees will apply to all applicable tenancies and licences to occupy housing in the private rented sector. You will not be able to charge any fees after this date (apart from those fees which are expressly permitted under the ban – see above).

For the full version of the governments guidance to landlords and agents for the new act click on this link: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/791273/TFA_Guidance_for_LandlordsAgents.pdf