The Tenant Fees Act comes into effect on 1 June. It limits the fees landlords and letting agents can charge tenants. Because of this, many agents have said they are unlikely to provide the post-tenancy references required for selective licensing schemes, something agents currently charge for.
The National Landlords Association (NLA) is concerned the Tenant Fees Act 2019 may limit access to rented property for tenants in areas with selective licensing.
Most selective licensing schemes require landlords to complete reference checks. If tenants are unable to satisfy these checks, landlords will be unable to let to them without breaching the conditions of their selective licensing claims the NLA.
Richard Lambert, CEO of the NLA, says:
“Tenants are at risk of losing out on the chance to find a home because letting agents are doing everything they can to minimise workloads to cut down on costs.
“While landlords who self-manage their portfolios will be covering many increased in costs, letting agents are looking at any way they can limit what they have to do on behalf of tenants, now that the costs cannot be directly recovered.
“The smooth running of the housing market requires a little give-and-take and, unfortunately, the reaction of some letting agents to the ban on most charges looks set to throw-up more barriers to moving from one tenancy to another.
“Just like private landlords, letting agency businesses are being put under increasing pressure by government regulation. However, they must realise that penalising outgoing tenants by refusing to provide references will ultimately cost them more than just the price of a reference as landlords opt to do without agents altogether.”
Effectively, the Act bans all payments a landlord or letting agent may take from a tenant except those expressly set out in the Act as “permitted” payments. These are:
Rent – which will include an advance payment for the first rent period, which must be the same as all the subsequent rent payments. In other words, the first period cannot be loaded to recover costs
Holding Deposit – refundable, and no more than the equivalent of one week’s rent, with its terms of refund and retention set-out clearly in writing
Tenancy Deposit, sometimes referred to as a security or damage deposit, again refundable and capped at no more than five weeks’ rent, if the total annual rent is less than £50,000, or a maximum of six weeks’ rent, if the annual rent exceeds £50,000
Amendments, mid-tenancy, amendments requested by the tenant are capped at £50, unless a greater cost can be fully justified.
Early Termination, payments associated with this when requested by the tenant
Provision of Utilities, such internet services, telephone, TV licence and council tax when appropriate.
Default Fees, when the tenant defaults on rent payments or other permitted payments specified in the tenancy agreement, including such items as replacement of a lost keys, etc.
There is considerably more detail within the Act itself – see the link below – so landlords and agents should familiarise themselves with the detail.