Tenant Fees Bill
- AuthorElizabeth Eastley
On 12 February 2019, it was announced that the Tenant Fees Act 2019 is due to come into force on 1 June 2019.
The Act restricts the ability of landlords and letting agents to charge certain fees to tenants and prospective tenants. It applies to most common (assured shorthold) tenancies including student accommodation and residential licences (with some exceptions), but not social housing or long leases.
The relevant provisions will come into force on 1 June 2019 for new and renewal leases and licences (excluding periodic tenancies: whereby a new fixed term is not agreed and the rental period ‘rolls-on’). From 1 June 2020, they will apply to existing leases and licences.
This Act also covers deposits taken by landlords. From 1 June 2019, if the annual rent is less than £50,000, which is often the case for most residential landlords, the deposit cannot exceed five weeks' rent. If the annual rent is £50,000 or more, the cap will be six weeks' rent. The Act has also stated that landlords may not set a rent at a higher level for the first part of the tenancy and then reduce it later, in an attempt to obtain a higher deposit from their tenants.
The Act also provides guidance on other charges (aside from rent) that a landlord or letting agent may need to charge, such as:
- loss of keys
- late payment of rent,
- variation, assignment or if obligations of the contract of tenancies need to be amended,
- early termination by the tenant,
- council tax, utilities, TV licences, and communication services.
In some cases, there are restrictions on the amounts that may be charged but they are mainly limited to the reasonable costs incurred by the landlord or letting agent.
If landlords attempt to insert these provisions into agreements, these terms will not bind the tenant or licensee. The Act will bring in a fine for breaches of up to £5,000. If a second breach is committed within five years, a criminal offence is committed and a fine and banning order may be imposed. Alternatively, the enforcing authority may impose a civil penalty of up to £30,000.
The Act also states that a landlord will be unable to serve a section 21 notice to terminate tenancies whilst holding prohibited payments from tenants.
The government intends to publish guidance shortly on this Act and landlords need to watch this space!