Tenant Fee Refunds:
Thousands of landlords may need to refund partial deposits to their tenants when tenancies are renewed – when a new contract is signed.
According to the Deposit Protection Service (DPS) around two-fifths of existing deposits (42%) breach the five-week deposit cap set by the Tenant Fees Act, which in England came into force on 1 June 2019. The Welsh government is currently working on plans to introduce a similar scheme for Welsh residential tenancies.
The only payments that can now be charged a tenant in England are for rent, a refundable holding deposit, a refundable tenancy (security) deposit, payments for changes to the tenancy and charges for early termination of a tenancy (when requested by the tenant), payments for most utilities and other services and default fees for late payment of rent, such as the replacement of lost keys.
A breach of this legislation could be considered a civil offence, with a financial penalty of up to £5,000. Any further breaches within five years could result in a criminal conviction, a banning landlord order and an unlimited fine. If a local authority chooses not to prosecute they can impose a financial penalty of up to £30,000 as an alternative.
Exceeding the cap won’t affect deposits taken out on tenancies let before the new law came into force, but it’s a different story if the tenancy is renewed, i.e., a new contract is signed. At this point the landlord is obliged to refund any excess over and above the five weeks rent equivalent deposit.
According to the housing charity Shelter, this will average around £192 per tenancy, or equivalent to a one-week’s rent refund for the average tenant.
At the end of the contract the landlord has 10 days to return the deposit cash when it’s held in a deposit protection scheme, unless the despot is the subject of a dispute, which means that the disputed amount will be held within the scheme until the dispute is settled.
There is no time limit set for the return when deposits are taken in respect of lodgings (licences), for university student halls or for assured tenancies which are not assured shorthold tenancies (ASTs).