From 1 June 2019, the Tenant Fees Act 2019 (“the Act”) came into force and applies to all assured short-hold tenancies, student accommodation and licences to occupy in England (only) entered into from this date. However, it does not apply to social housing authorities, long leases and commercial tenancies.
The Act has been introduced with the intention of making residential letting more equal and affordable for tenants by reducing costs at the outset.
The Act defines the payments a landlord or letting agent can legitimately charge a tenant in respect of a tenancy entered into in England, and restricts what third party contracts a tenant or guarantor may be required to be bound by in relation to services and insurance.
Fees/payments under the Tenant Fees Act
Where a tenancy agreement was entered into prior to 1 June 2019, a landlord or letting agent will still be able to charge fees until 31 May 2020 but, only where these are defined in the existing agreement, e.g. check out or renewal fees.
This means, from 1 June 2020, the Act will apply to all tenancies, as defined above, and a landlord will only be able to charge those permitted fees under it. If the landlord does charge a prohibited fee in error, they must return the payment immediately and ensure the tenant has received it within 28 days. If they do not return the payment within 28 days, they will have been deemed to making the tenant pay a prohibited fee.
If prohibited fees have been taken, the landlord will not be able to serve a valid Form 6A Section 21 Notice to terminate the tenancy until all prohibited fees have been repaid to the tenant.
Trading Standards and the newly commissioned, Lead Enforcement Authority, will seek to enforce the ban and may audit letting agents.
If a landlord or letting agent is found to have charged a prohibited fee to a tenant they may face a civil financial penalty of up to £5,000 for their first offence, and if found to have charged a second or subsequent prohibited fee, they may face a:
- Criminal conviction;
- Banning Order, which would prohibit them from letting property; and/or
- Maximum penalty fine of £30,000.
Permitted fees
Permitted fees are contained within Schedule 1 of the Act and relate to:
- Rent
- Tenancy deposit
- Holding deposit
- Default fees
- Late payment of rent
- Replacement key or security device/fobs
- Changes to a tenancy
- Early termination fees
- Council tax
- Utilities – electricity, gas, other fuel, water or sewerage, broadband, TV or phone payments
Prohibited fees
Anything that is not a permitted fee is a prohibited fee. These include:
- Viewing fees
- Tenancy set-up fees – including 3rd party fees
- Inventory fees
- Referencing fees – including 3rd party fees
- Guarantor/guarantee fees
- Check-out fees
- Cleaning fees
- Gardening fees
Tenant Fees Act – How Can Nelsons Help
Paula Haverkamp
is a Paralegal in our Dispute Resolution team specialising in landlord and tenant matters and property disputes.
For further information on the Tenant Fees Act 2019 or any related queries, please contact Paula or another member of our team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online form.