One June 1st 2019 the Tenant Fees Act will come into force prohibiting landlords and agents from charging any fees to tenants other than those that have been permitted by the act. Any contract that is signed after June 1 must adhere to the new regulations including those for tenancy fees.
The act applies to all short hold tenancies and student accommodation, but it only applies in England. Letting fees are already banned in Scotland and, while they are currently still legal in Wales and Northern Ireland, a similar policy was put before the Welsh government in June 2018 and is expected to come into force this September.
It’s become tradition in recent years for letting agents to charge administration fees on top of the usual deposit and first month’s rent when moving in a new tenant, but the act bans them as it is not a permitted fee.
What the act defines as a permitted tenancy fee are:
- The deposit
- A holding deposit to secure the property which is maxed at one week’s rent
- Any changes to the property, e.g. the introduction of a pet or a change in the contract – this is capped at £50
- Utilities like gas and water
- Council tax
- TV license fees
- ‘Communication fees’, e.g. telephone and broadband
The act also allows for a fee to be charged if a tenant terminates the contract early, but in this case the landlord must be able to show reasonable loss has been suffered.
The new legislation also allows for certain fines to be written into each contract, but defines when and how much they a tenant can be charged. Late payment of rent is the main one, this can only be after 14 days have passed and interest at a maximum of 3% above base rate.
Tenancy Fees that are no longer permitted include:
- Property viewing
- Administration charges
- Guarantors Inventory checks
- Pet fees/deposits
- Renewal/exit fees
- Professional end of tenancy cleaning
- Third party fees – unless the tenant chooses to undertake the services themselves
- Gardening services -unless this is included in the rent
The last major change the act implements is restrictions on how much can be charged for a deposit. If the total annual rent is less than £50,000, the deposit is capped at five weeks rent. If the rent is between £50,000 and £100,000 then the landlord can request up to six weeks.
Deposits must be protected in one of the three government backed tenancy schemes within 30 days of the payment being taken.
Breach of the legislation is a civil offence and can incur a £5,000 fine. If there is another breach within five years of the initial one, then it becomes a criminal offence which could carry jail time.
In addition to this. the landlord or agent who charged the unlawful fee will not be able to evict a tenant until they have repaid all of the illegal charges.
If in doubt the full policy can be found on the government’s website.
We would be more than happy to talk to any prospective tenants about how the new rules will be implemented by Pcik My Pad, so if you have any questions about tenancy fees then please contact our team.