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New reform - tenant fees act protects tenants from unfair letting fees

Jun 13th, 2019

Richard Tomlinson, Partner

The latest legislation reform with the aim of protecting tenants arrived on 1 June 2019, when the Tenant Fees Act 2019 came into force. The act itself aims to restrict the amount and type of payments that landlords and letting agents can charge tenants. 

Under the new legislation, the only payments that a landlord can charge in connection with a tenancy are: 

  • The rent;
  • A refundable tenancy deposit, capped at no more than five weeks’ rent (where annual
  • rent is less than £50,000);
  • A refundable holding deposit to reserve a property capped at one week’s rent;
  • Payments to change the tenancy where requested by the tenant capped at £50 or “reasonable costs” if higher;
  • Payments associated with early termination of the tenancy where requested by the tenant;
  • Payments in respect of utilities, communication services, TV licence and council tax; and
  • A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement.

All other fees charged by a landlord to a tenant under an assured shorthold tenancy agreement will be unlawful. 

This includes charging a fee for viewing a property; setting up a new tenancy; an inventory; dealing with the end of a tenancy (assuming the tenant has not requested early termination) or a tenant “checking-out”; a professional clean (although a tenant must still ensure a property is returned in the condition that they found it, aside from normal wear and tear); and third-party fees such as credit checks.

The consequences of failing to comply will be full repayment to the tenant and a possible fine of up to £5,000. If a further breach is committed within 5 years of the imposition of a financial penalty, this would be a criminal offence, the penalty for which is an unlimited fine. A landlord receiving two or more financial penalties within a 12 month period may also be added to the database of rogue landlords and property agents.

Importantly, a landlord will be unable to evict a tenant using the Section 21 accelerated
eviction procedure until all unlawfully charged fees has been returned to the tenant.

We would advise landlords to keep a record of all payments taken from a tenant and the
reason for that payment, as the Court may require this when considering a request for an
order for possession.

Landlords should note that there is a new prescribed form of Section 21 Notice to reflect
the Tenants Fees Act 2019. Landlords must use the prescribed form to serve a valid Section 21 Notice.

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