The new Government legislation, which orders that a security deposit for an assured-shorthold tenancy is fixed at the same amount as 5-weeks’ rent with an annual rent cost of up to £50,000, or 6-weeks’ rent for a tenancy with a yearly rent of £50,000 or more, will come into effect on 1st June 2019. The legislation is entitled The Tenant Fees Act 2019 and received Royal Assent last month, meaning that is has now become an Act.
The Act has been designed by the Government to reduce the amount of unnecessary fees incurred by tenants from landlords and letting agents. It is projected that the tenancy security deposit cap will save tenants a combined annual total of £240 million, or up to £70 per tenant.
The legislation will mean that landlords and letting agents will only able to recover reasonably incurred costs from tenants and must give proof of these costs before any charges are imposed.
Tenancy Security Deposit Cap – How Will It Be Applied?
The Tenant Fees Act 2019 will apply to all new tenancy agreements entered into or renewed on a fixed term basis. However, it won’t affect any agreements which operate on a periodic basis.
Additionally, if a new tenancy contract is entered into prior to the commencement of the Act on 1st June 2019, then they will not be affected but the tenancy security deposit cap will apply to any renewals which take place after this date.
The Ministry of Housing, Communities and Local Government (MHCLG) is currently in talks with all of the tenancy deposit protection schemes with regards to tenancy deposits that are currently under protection that will be affected by the new cap. It is anticipated that the talks will result in a partial repayment of a deposit from the tenancy deposit protection schemes, which won’t require the landlord to manually repay and re-protect the deposit (or provide new Prescribed Information).
Once the discussions between the MHCLG and the tenancy deposit protection schemes have been finalised, guidance will be issued which will include answers to numerous other queries relating to the tenancy security deposit cap.
How Nelsons Can Help
Paula Haverkamp is a Paralegal in our Dispute Resolution team specialising in landlord and tenant issues and property disputes.
For further information about the tenancy security deposit cap, please contact Paula or another member of our team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.