Tenant Fees Act 2019
13 February 2019
The Tenant Fees Act received Royal Assent on 12 February 2019.
From 1 June 2019 landlords and agents will be prohibited from charging tenants fees, save for certain permitted charges. The starting point is that all charges are banned, except for certain "permitted payments". Permitted payments include rent, deposits, holding deposits and charges for tenant breach of contract, but even these payments are to be subject to further controls.
For example landlords/agents will no longer be permitted to "front load" rent: if the rent during one year is higher for 10 months and then drops for the final two months (as is a popular model in student lets), the rent will be deemed to be the figure for the final two months, the balance being a "prohibited payments". Other measures include that deposits may no longer be more than five weeks rent and holding deposits no more than one week's rent. There are statutory controls on the way holding deposits are to be handled and paid back to tenants. Prohibited payments include charges for referencing, credit checks, and inventories.
The triumph for tenants and the sting for landlords and agents is that this Act has teeth:
Penalties for breaches of the Act include a fine of up to £30,000 or prosecution and criminal record; tenants will have a statutory right to recover any unlawfully charged fees.
Local authorities will have the right to keep the money from fines for certain purposes, and are therefore likely to be proactive in enforcement.
It comes as no surprise that in addition to criminal sanctions, fines and orders to repay any prohibited payments, no valid section 21 notice may be served on a tenant while a landlord or agent is holding onto any prohibited payment.
Although the new rules will apply at first only to new tenancies after 1 June 2019, from 1 June 2020 the rules will apply to all tenancies and clauses in those tenancies that purport to charge will be ineffective.
If you would like any assistance or further advice please contact Alexandra Sollohub.