What landlords need to know about the Tenant Fees Act 2019

What landlords need to know about the Tenant Fees Act 2019

If you are a landlord who lets residential properties in the private property sector, you may already be aware of the Tenant Fees Act 2019.

The Act was introduced on 1st June 2019 prohibits landlords and their agents from charging tenants certain prohibited payments. The Act applies to Assured Shorthold Tenancies (ASTs), student tenancies and licences to occupy / lodger lettings signed on or after 1 June 2019.

From 1 June 2020, all tenancies granted before 1 June 2019 will be caught by the Act. Terms in tenancies requiring payment of prohibited fees will no longer be binding.

Landlords and agents found charging the fees could be fined £5,000 for a first offence. If they break the rules again within five years, they could be given an unlimited fine.

The Act sets out certain payments that can be charged in connection with a tenancy which include:

  • Rent
  • Utilities and council tax if included within the tenancy.
  • A refundable deposit no more than five weeks rent (capped at six weeks’ where the annual rent is £50,000 or more).
  • A refundable holding deposit to reserve the property capped at one weeks’ rent.
  • Changes to the tenancy requested by the tenant- capped at £50 (or “reasonable costs”)
  • Early termination of the tenancy requested by the tenant– capped at the landlord’s loss or agent’s reasonable costs.
  • Defaults by the tenant (such as fines for late rent payments or lost keys) must be “reasonable costs”.

Prohibited payments under the Act include:

  • Viewing fees
  • Tenancy set up fees
  • charges for inventory checks
  • “check-out” fees
  • charges for third party services including professional cleaning at the end of the tenancy, gardening (unless included in the tenancy) and chimney sweeping
  • charging for a rent guarantor

Landlords and agents will not be able to charge for the renewal of a new tenancy. If the tenancy was entered into before 1 June 2019, renewal fees agreed at the time will be payable – but only until 31 May 2020.

Any payments prohibited by the Act will need to be met by landlords, which is an expense landlords will not have previously thought about. There are already reports suggesting that landlords are increasing their rents to recover these costs as a result.

Another important change brought in by the Act is that it restricts a landlord’s ability to serve a section 21 eviction notice to terminate the tenancy. Landlords will not be able to evict a tenant if they have charged any unlawful fees unless they are repaid to the tenant.

As a result of the Act, Landlords will need to review their tenancy agreements whether they are new, renewal or existing tenancy entered into prior to 1st June 2019.

If you are a landlord or if you are considering letting a residential property and would like specific advice on how the Act may affect you, please contact Jenny Bell, a solicitor in our Residential Conveyancing team.

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