Since the RLA published its guide to the tenants’ fees bill there have been a number of questions and comments from members looking for clarification on what they can – and can’t charge for.
Here we look at some of the commonly asked questions.
What can I charge for?
In short you can charge for rent and deposits and if a tenant defaults on the contract. There are two other default fees outlines in the ‘exemptions’ section below, but these charges will be limited by the new legislation.
Which fees are banned under the new rules?
In short that pretty much any fee that is in the tenancy agreement at present will be void (unless it is exempt).
Examples of banned fees include, but are not limited to:
- Charging for a guarantor form
- Credit checks
- Cleaning services
- Professional cleaning
- Having the property de-fleaed as a condition of allowing pets in the property
- Administration charges
- Requirements to have specific insurance providers
- Gardening services
Which fees are exempt?
Exemptions to the bill exist for:
However, all four are subject to additional restrictions as part of the legislation.
- You may also charge for changing tenants or allowing tenants to leave the property early (subject to restrictions on costs).
There two other ‘default fees’ you will be able to charge, if either:
- the tenant loses their keys or
- is late paying the rent.
Again, there are rules limiting these charges.
If I can’t charge a higher deposit, could I introduce a higher rent band for tenants with pets?
Under the bill deposits are limited to the equivalent of five weeks rent (if the annual rent is less than £50,000) so you will no longer be able to charge more for tenants with pets.
In short it is unlikely that a ‘two-tier’ rent systems would be allowed as the ‘with pets’ rate could be considered a fee.
Could I charge a high level of rent in the first month to cover my increased costs?
No. Setting a higher rent for the first portion of the tenancy and then dropping it down afterwards is prohibited.
However, the ban DOES NOT prevent you increasing the rent permanently. The government believes landlords will be loath to do this as potential tenants will simply go elsewhere.
What if the deposit I hold now is higher than five weeks. Do I need to refund the money if the tenant renews their tenancy?
Yes, when the contract is renewed you would need to reduce the value of the deposit you are holding to five weeks’ rent. However, if you sign the renewal tenancy agreement before June 1st then you will not need to do this for the entirety of the fixed term.
Are there any changes when it comes to the level of holding deposit I can charge?
Yes, holding deposits will be limited to a maximum of a week’s rent and subject to statutory legislation on the repayment of this should the tenancy not go ahead.
Briefly, this is proposed to be:
- The landlord has 15 days to make a decision once a holding deposit is taken.
- If the tenancy does not go ahead then the money must be repaid in full within seven days of the deadline being reached or the landlord backing out.
- Repayment does not need to be in full if the tenant backs out of the tenancy agreement themselves, fails right to rent checks, has provided false or misleading information, or where the landlord tries their best to get the information needed but the tenant fails to provide it within the 15 days.
- If the tenancy does go ahead, the holding deposit must be returned within seven days of agreement, unless it is converted into part payment of the actual deposit or used towards the initial rent payment.
My tenant lost their keys and called me in the middle of the night to let them in. Can I charge them for this?
In the case of lost keys, you will be able to charge for the cost of replacing them and reasonable costs.
These costs MUST be evidenced in writing, for example through receipts for the keys and petrol used etc. You cannot charge for your time or the inconvenience, other then in ‘exceptional circumstances’.
The government guidance says: “Generally, we do not consider it reasonable for landlords or agents to charge for their time under a default fee. In exceptional cases, it may be appropriate, but the onus will be on the landlord or agent to demonstrate that they have incurred business costs as a result of the default.
What happens if I make a mistake?
The consequences for charging a fee that is not permitted are far reaching.
Tenants will be able to reclaim the money they have paid via the county court – with interest – and trading standards will be able to fine you up to £30,000.
You will also be unable to serve a Section 21 notice if you have charged a tenant a fee where you shouldn’t have AND kept the money.
If you realise you have levied a charge that you shouldn’t have done you should repay it at once.
You are only in breach if you make the charge, take the money AND keep it.
For a full guide to the tenant fees ban visit www.rla.org.uk/feeban
If you have any other queries about your responsibilities call the RLA advice team on 03330 142998.