Tenant Fees Act 2019 – Is your tenancy compliant?

Tenant Fees Act 2019 – Is your tenancy compliant?

On 1 June 2019 the Tenant Fees Act 2019 took effect. The Act was introduced with the intention of reducing costs for tenants in the private rental sector by improving fairness, competition and affordability; effectively banning charges that had been deemed unfair on tenants.

Any tenancies entered in to on after 1 June 2019 will have to comply, whereas any pre-existing tenancies, whether still in their fixed term or those that have turned statutory periodic, will need to comply by June 2020.

Whilst this gives Landlords a 12-month period to ensure compliance for any existing tenancies, we have already seen a significant number of landlords who are not aware of the changes or the steps they need to take to ensure compliance and it is clear that some landlords are finding it difficult to keep up with the latest developments.

With the sanctions imposed for non-compliance more severe than ever and with more changes on the horizon in respect of the proposed abolishment of the current Section 21 procedure, it is becoming more difficult for landlords to terminate tenancies and mistakes in terms of compliance can prove very costly. To find out more about this, please click here.

It is therefore imperative that landlords act now to ensure that they are compliant with the latest legislation to avoid difficulties in the future.

For those landlords who are unsure of their obligations under the Act, we discuss the key changes below.

The Act banned landlords and agents from charging tenants certain payments in connection with a tenancy. The only payments that can now be legally charged in connection with a tenancy are limited to:-

  • Rent;
  • A refundable deposit capped at a maximum of 5 weeks’ rent
  • A refundable holding deposit (to reserve a property) capped at no more than one weeks’ rent;
  • Payments to change a tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher;
  • Payments associated with early termination of the tenancy, when requested by the tenant;
  • Payments in respect of utilities, communication services, TV licence and council tax; and
  • A default fee for late payment of rent and replacement of a lost key/security device, where required under the tenancy

Any fee not included on the list is a prohibited payment outlawed under the ban. This includes, viewing fees, set up fees, reference and credit check fees, professional cleaning fees, gardening service fees and check out fees.

Full Government guidance for landlords and agents is available here.

The consequences for non-compliance are serious and should not be overlooked. Any failure to comply can lead to a civil offence with a fine of £5,000 for a first offence and civil penalties of up to £30,000 for subsequent breaches.

The wider implication of the Act is that any landlord or agent who makes a charge in relation to a prohibited fee will render any Section 21 Notice served later to bring the tenancy to an end defective and consequently Landlords will lose their right to a mandatory no fault right to possession unless that fee is returned to the tenant with 28 days.

Landlords should therefore carefully review any existing tenancy agreements to ensure that they comply with the new legislative requirements and re-issue new agreements as required.

It is always recommended that specialist advice is sought in relation to the grant of a new tenancy or the termination of an existing tenancy from a solicitor, agent or landlord association.

If you require any advice in relation to a landlord and tenant matter please contact Nicola Mitchell-Rodd who will be happy to assist.

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