Tenant Fees Act:
The ban on letting fees and excess tenancy charges in England came into force nearly two weeks ago. This is a new set of regulations affecting landlords and letting agents which the Government estimated will cost (in aggregate) landlords up to £83m and letting agents £157m.
The new rules apply to new or renewed tenancy agreements signed on or after 1 June 2019.
Similar legislation was imposed in Scotland a couple of years ago, and are on the cards for Wales from this September. A ban will not be brought in Northern Ireland until there is a sitting assembly able to pass the relevant legislation.
So, in some case tenants will be entitled to a partial deposit refund should they renew a tenancy that commenced before the 1st of June, and where a deposit was taken which exceeded the 5 week rule. As it has been commonplace for landlords and agents to request at least 6 week deposits and sometimes more, there could be a considerable number of tenants entitled to refunds on renewal in the future.
The new law prevents landlords or their agents requesting most types of fees associated with letting a property in the private rented sector in England, fees that were previously taken as a matter of course, not so much by private landlords but most certainly by agents.
Unless payments appear in a statutory list (Schedule 1 of the Act) of permitted payments no fees can now be taken and penalties for transgressions are quite sever. A breach of the legislation will usually be a civil breach with a financial penalty of up to £5,000, so it’s very important that landlords and agents understand the rules on this. Tenant Fees Act
If a further breach should be committed within five years of the imposition of a financial penalty or a conviction for a previous breach, this will be a criminal offence. Upon conviction, the penalty is an unlimited fine and a banning order offence under the Housing and Planning Act 2016.
As with some other transgressions however, enforcement authorities can now impose a financial penalty of up to £30,000 as an alternative to prosecution. In such as case the local authority will have discretion over whether to prosecute or impose a financial penalty. Where a financial penalty is imposed it will not amount to a criminal conviction.
The ban includes fees for viewings, credit checks, references, inventories and the drawing up of a tenancy agreement, all of which have traditionally been charged and in some extreme cases have led to upfront costs for tenants of up to £800.
Other than rent, in practice the only fees that landlords or letting agents can charge tenants are refundable security deposits capped at no more than one weeks’ rent (annual rent divided by 52), providing the total annual rent is less than £50,000, or six weeks’ rent if over this. However, there are some other costs that can be charged – see the links above.