On 1st June 2019, the Tenant Fees Act will come into force in England.
Initially, when the Act comes into force, it will only apply to new tenancies and renewals of tenancies, excluding statutory and contractual periodic tenancies that arise after 1st June 2019. After one year, in 2020, the ban will attach to pre-existing tenancies.
In this article, we have compiled some helpful resources for landlords and agents. You can also read a recent blog written by our Policy Director David Smith on optional and default fees here.
What is the Tenant Fees Act?
The Tenant Fees Act will make it illegal for landlords and letting agents to charge any fee other than rent, deposits, holding deposits and charges for defaulting on the contract.
However, all four of these are subject to additional restrictions as part of the new legislation, and landlords and agents will need to be mindful of these changes.
Does the fee ban apply in England and Wales?
In Wales, the tenant fee ban is due to come into force in September.
The RLA will be publishing guidance specifically on the fee ban in Wales for landlords and agents, in the coming weeks.
What fees will be banned?
Most fees, unless they are exempt, will be banned.
This includes: Credit checks, cleaning services, inventories, admin charges and gardening services. For the full list of banned fees, read the RLA’s tenant fee ban guidance. R
What additional restrictions will the Act bring in?
One of the main restrictions the Tenant Fees Act will bring in will be the amount that landlords and agents can charge for deposits. Deposits will be limited to five weeks rent as a maximum amount, for tenancies where the annual rent is below £50,000. If the annual rent is above this, then the maximum deposit that can be charged is six weeks rent.
The RLA’s partners TDS have produced a useful deposit cap calculator, which landlords can use to calculate how much deposit they are able to charge under the Tenant Fees Act. To use the calculator, click here and scroll down to the “deposits” section.
Holding deposits will also be limited to a maximum of one week’s rent, and subject to statutory legislation on the repayment of this, should the tenancy not go ahead. More on this can be read in the RLA’s guidance.
Landlords and agents will also not be able to set rent at a higher level for the first portion of the tenancy, and the drop it down afterwards. However, charging a higher rent than you would normally charge for the property, that is consistent throughout the tenancy, is fine.
What are the penalties for non-compliance?
Where a breach has occurred and a banned fee has been taken, tenants will be able to get any money wrongly paid back, via the county court. For a first offence, a fine of up to £5000 can be charged. However subsequent breaches could see landlords and agents faced with a fine of up to £30,000.
Last month the Government published guidance on the Act. There are three guides in total, one for landlords, one for tenants and one for councils. This guidance can be read online here.
Do you have more questions?
To learn more, you can read the RLA’s Tenant Fee Ban Guidance for landlords and agents here.
RLA members can access unlimited one to one advice. If you have questions about the upcoming tenant fee ban or anything else relating to your tenancy, give our advice team a call today.