Tenant Fees Act 2019 – fees ban now applies to all tenancies

The Tenant Fees Act 2019 came into effect on June 1st 2019, making it unlawful for letting agents and landlords in the private rented sector (PRS) in England to charge fees to tenants. There is also a cap on tenancy deposits.

There was an initial transition period, with existing tenancies not falling under the new legislation, but this ended on May 31st 2020, so now the fees ban applies to all tenancies, new or renewed, both Fixed Term and Periodic, regardless of when the tenancy started.

The only exceptions are long leases, any non-Housing Act tenancies (contractual), a tenant of social housing, company lets or a licence to occupy holiday accommodation.

Breaching any of these regulations will make landlords and/or letting agents liable for significant fines – up to £5000 for the first breach and £30,000 for each additional breach.

The new regulations are detailed but key points follow.

Key points of the Tenant Fees Act 2019

Permitted payments

All payments/fees are now prohibited unless specifically permitted by The Tenant Fees Act. So, landlords and letting agents cannot ask tenants to make any payment as a condition of granting, renewing or continuing a tenancy, except:

– Rent
– A capped, refundable Tenancy Deposit
– A capped, refundable Holding Deposit
– Payments in the event of a default
– Payment on variation, assignment or novation of a tenancy
– Payment on termination (surrender) of a tenancy
– Payments of Council Tax
– Payments for utilities (electricity, gas, water)
– Payments for a TV licence
– Communication services (eg telephone line)
– Internet, cable or satellite TV
– Green Deal charge

Prohibited payments

Any other charges other than those listed above are now prohibited under the terms of the Act. These include:

– Application fees
– Tenancy set up costs (tenancy agreement fees, Tenancy Deposit Scheme fees etc)
– Tenant referencing
– Contract negotiation
– Inventory check-in and check-out fees
– Card payment fees
– Professional cleaning

Landlords cannot charge a higher rent in any one period, say for the first or any other month, to recover any of these costs.

Professional cleaning

When it comes to end of tenancy cleaning, a landlord can only request that a property is cleaned to a ‘professional standard’ at the end of a tenancy if it was in this condition at the start. But the landlord cannot ask a tenant to pay a professional cleaner to do this. Tenants are only responsible for returning the property in the same condition as they found it, apart from any usual wear and tear. This is why carrying out an inventory at the start and end of a tenancy is so important.

Security deposits

Security deposits are now capped at five weeks’ rent (except if the rent is over £50k per annum when the deposit is six weeks’ rent). Additional deposits for students or pets cannot be charged. Only one deposit per property can be charged and on renewal of a tenancy, any excess over five weeks’ rent must be refunded.

Holding deposits

Only one week’s rent can be taken as a holding deposit and it can only be retained if the applicant withdraws, fails a Right to Rent check, provides false or misleading information or fails to take all reasonable steps to enter into a tenancy agreement within 15 days.

For more information about the new regulations, visit
https://www.gov.uk/government/collections/tenant-fees-act

If you need any further guidance, please contact your nearest Benham & Reeves branch.