Sep 17, 2019
Everything You Need to Know About the New Tenant Fee Bans in England
On 1st June 2019 new legislation came into force in England which prevents landlords and letting agents from levying certain administrative charges against renters. Here we outline everything you need to know about this change, and what it means for both tenants and landlords.
What is the Tenant Fees Act?
The Tenant Fees Act 2019 is a new piece of legislation, in force since 1st June 2019, which caps tenancy deposits, and bans many of the administrative charges associated with renting. It applies to all new or renewed rental agreements signed on or since 1st June.
Why Have These Changes Been Made?
This new legislation is a result of the government's attempts to make private renting more affordable for tenants. The hidden costs previously associated with renting properties, such as high deposits, referencing fees, and fees for replacing property items, have been a strain on tenants and even a barrier to the rental market for many.
Moving house is an expensive business, and by getting rid of some of the charges, tenants have less to pay upfront, and can expect more clarity in relation to any other tenancy charges.
Who is Affected?
If you have taken out a tenancy agreement since 1st June, or have renewed an existing tenancy agreement since then, you will be protected by the Act as a tenant. If you signed a tenancy agreement before this date, which involved agreeing to pay future sums (such as check-out fees), these will still have to be paid up to 31st May 2020.
All landlords of private rental properties will be affected by this change in terms of the fees and deposits that they can charge tenants for. Landlords should note that, as of 1st June, they must be in compliance with all legislation set out in the Act, or could face charges of up to £5,000.
What Does it Mean for Tenants?
Renters will only have to save a maximum of 6 weeks’ deposit, and depending on the overall value of the property it can be capped at 5 weeks. Aside from this, other charges and payments are limited to:
- The agreed rent for the property
- A fully-refundable holding deposit (which may not exceed the value of a week's rent at the property)
- Associated payments of utility bills, Council Tax, and television license
- payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher
- Late payment of rent/key replacement fee
- Charges for tenancy termination, but only if the termination is initiated by the tenant
Further to this, renters cannot be charged for:
- Referencing checks
- Administration fees
- Guarantor checks
- Inventories and check-out reports
- Credit checks
What Does it Mean for Landlords?
Landlords must make sure that they are fully informed of the new changes signaled by the Tenant Fees Act. As listed above, landlords and letting agents cannot charge tenants for anything that does not come under the permitted fees, and can face fines if they do so. There will also be a reduced time limit for repayment of such funds to the tenant.
As documented on the government website, Section 21 notices for eviction cannot be served if landlords have not returned any deposits or fees taken unlawfully from the tenant. Until any payments of this nature are refunded to the tenant, any Section 21 notice served will not be valid.
It is recommended that landlords consider consulting with a property solicitor to ensure that they are fully compliant with the new laws.
For more information on the Tenant fee ban and how to best deal with it, it is also recommended to read THIS article by Helix Law.