From 1st June 2019, lettings agencies and landlords will be prohibited from charging tenants with fees associated with the start, end or renewal of a tenancy.
In summary the Act bans letting fees paid by tenants to an agent or landlord in the private rented sector and caps tenancy deposits in England.
THE BAN APPLIES TO:
· Assured Shorthold Tenancies
· Licenses to occupy (which will include lodger licenses)
· Student lettings provided by specified educational institutions
THE BAN DOES NOT APPLY TO:
· Assured Tenancies
· Long leases
· Non Housing Act tenancies (ie common law tenancies such a company lets, and tenancies with a annual rent of over £100,000 pa)
· Social housing
· Holiday accommodation
LIST OF PERMITTED PAYMENTS WHICH AN AGENT OR LANDLORD CAN STILL EXPECT TENANTS TO PAY:
2. Tenancy Deposit – 5 weeks deposit is permitted for tenancies where the annual rent is £50,000 or less and 6 weeks deposit where the annual rent is above £50,000
3. Holding Deposits – limited to 1 weeks rent
4. Payment in the event of default – the tenancy agreement must contain a provision permitting such a charge and it can only be applied for the loss of a key or other security device or where rent is more than 14 days late. In order to recover the payment, the charge must be reasonably incurred and (for loss of keys) supported by some form of evidence, such as a receipt.
5. Payment on variation, assignment or novation of tenancy – this charge can be applied by the landlord or the agent for agreeing or arranging the variation etc. The charge should not exceed £50 or the reasonable costs incurred by the landlord or agent for the variation etc.
6. Payment on termination of tenancy – this charge is applied if the tenant terminates the tenancy during the fixed term period or during a periodic period without giving the contractual or statutory notice.
7. Payment in respect of council tax
8. Payment in respect of utilities
9. Payment in respect of television licence
10. Payment in respect of communication services – this would include, satellite, internet and telephone services.
11. A green deal payment or other energy efficiency charges
There is a 12-month transition period. This means any existing fees detailed within a tenancy agreement exchanged before June 1st 2019 will apply until 31st May 2020.
On or after 1 June 2020 all tenancies will be subject to the Tenant Fees Act even where there is a contractual term in the tenancy agreement permitting payments that are otherwise banned under the Act.
A fine of up to £5,000 per offence will be charged to any agent/landlord found to be still charging prohibited fee(s) to tenant(s).
It is important to note that this article isn’t exhaustive and doesn’t constitute legal advice.