The Ministry of Housing, Communities and Local Government says landlords will not have to return any part of a deposit when they reduce rents, and will still be compliant with the Tenant Fees Act.

The government has clarified that landlords who offer tenants a lower rent or a rent holiday during the Coronavirus crisis will not have to return the relevant portion of the tenant’s existing deposit.

This announcement follows the Tenant Fees Act going live in full today and is an attempt by the Ministry of Housing, Communities and Local Government (MHCLG) to ensure landlords understand its rules on rental deposits.

While the Tenant Fees Act limits deposits to five weeks’ rent, this applies to the rent level at the beginning of the tenancy and not any subsequent variations.

The clarification is within MHCLG’s 24-page Coronavirus (COVID-19) Guidance for Landlords and Tenants document updated today but originally published on 28th March.

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Sean Hooker, Head of Redress at The PRS, warns landlords to ensure they keep a clear record of what’s been agreed when negotiating and that it’s understood how long the agreement will last.

“Tenant and landlord need to agree what happens after the rent reduction period is over including whether the tenant is expected to repay the unpaid rent via a higher rent afterwards, or whether the outstanding rent is waived.

“Once clear documentation has been established, then on that basis the deposit can be retained at its original level, and a landlord or letting agent will be in accordance with the Tenant Fees Act.”

The PRS recently launched a mediation service designed to help landlords or their agent and a tenant resolve issues related to a tenancy without going to court.



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1 COMMENT

  1. This is all very confusing.
    Surely, a rent waiver and a voluntary reduction in rent are the same by definition, and any tenant given a reduction in those terms will not expect to have to pay it back afterwards. If they have to pay it back, it is called rent arrears (or a loan), and the rent should not be reduced, so that it can be deducted from the deposit if the tenant hasn’t paid back when they move out.
    The Guidance for Landlords and Tenants document mentioned above states in point 1.13 that the deposit cap will not be altered by rent reductions, meaning that the deposit can remain protected and need not be adjusted i.e. the portion of the rent reduction does not need to be returned to the tenant at this stage. Yet it does not say that the landlord can keep it, either.
    There seems to be a misunderstanding that needs correcting if we want to avoid putting landlords and tenants in further distress.

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