The Tenant Fees Bill is set to come into force on June 1 this year, it has been announced. This means that, subject to the bill getting Royal Assent, the ban will apply to all tenancies signed after this date.W
Once the ban comes into force you will only be allowed to take payments for rent and deposits from tenants – with rules around the size of the deposits and how they are dealt with significantly tightened.
Deposits will be limited to five weeks, where annual rent is below £50,000 with new, stricter rules on holding deposits.
Aside from being able to charge for damages caused by the tenant, there are just two other ‘default fees’ you will be able to charge, if either:
- the tenant loses their keys or
- is late paying the rent.
These fees will also be limited.
In the case of lost keys, you will be able to charge for the cost of replacing them and reasonable costs.
However, 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.
When it comes to rent arrears, the government’s new rules say you can charge 3% above the Bank of England base rate in interest, from the date. At the time of writing this would be 3.75% interest.
In practice, this will usually be for a tiny amount of money. While it will be calculated on an individual basis, a tenant who is two months late paying a month’s rent (set at the national average) could be charged just £4.47.
Landlords can still charge for a change to the tenancy requested by the tenant, with £50 considered the ‘norm’ in government guidance. Any charge above this figure would need to be backed up with written evidence.
Similarly, if tenant wants to leave the contract early, they will be liable to pay the rent up to a maximum of the length of the fixed term of the contract.
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.
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.