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The Tenant Fees Act – a summary

Posted on 1 May 2019

The Tenant Fees Act comes into force on 1 June 2019. This Act restricts the fees that landlords and agents can charge tenants and imposes penalties on landlords if they do not comply with the Act.  

This Act is one of many changes to the private rental market announced recently which have the aim of improving the situation for tenants. Landlords and agents need to be aware of these changes and alter their practices accordingly.

Which tenancies does it apply to?

The Act only applies to tenancies in England.

From 1 June 2019 it will apply to all assured shorthold tenancies, tenancies of student accommodation and most licences to occupy housing in the private rental sector entered into on or after 1 June 2019.

From 1 June 2020 it will apply to all assured shorthold tenancies, tenancies of student accommodation and most licences to occupy housing in the private rental sector whenever completed.

Which 'fees' does it apply to?

The Act allows landlords (or their agents) to require tenants (or anyone acting on their behalf or guaranteeing their rent) to pay any of the following payments:

  • the rent;
  • a refundable tenancy deposit capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above;
  • a refundable holding deposit (to reserve a property) capped at no more than one week’s rent;
  • payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher;
  • payments associated with early termination of the tenancy, when 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.

However, any other payments are prohibited. So for example tenancy set-up fees, viewing fees, credit-check fees, an inventory check instigated by the landlord, cleaning and check-out fees will now be prohibited payments.

What is the consequence of requiring a prohibited payment?

The relevant clauses of the agreement will not be binding on the tenant but the rest of the agreement will continue to have effect.

The real impact is on the ability of the landlord to recover possession and the risk of financial penalties. A landlord cannot recover possession of the property through the section 21 process until any unlawfully charged fees or deposits have been repaid.

A breach will usually be a civil offence with a penalty of up to £5,000 for a first breach. Further offences can be prosecuted as criminal offences with the consequence of a banning order or an unlimited fine. As an alternative to prosecution a financial penalty of up to £30,000 can be imposed.

Who will enforce the Act?

Trading Standards or a district council (in lieu of a Trading Standards body) have a duty to enforce the Act.

Tenants (or anyone acting on their behalf) can apply to the First–tier Tribunal to recover the unlawfully-charged fees.

Where the payment has been taken by an agent, tenants can also seek repayment through the relevant redress scheme against the agent.

Attempt to include the fees in the first rent payment?

An attempt to try and circumvent the Act by demanding a higher first rent payment which is then reduced for the rest of the tenancy will be caught by the Act. However 'normal' rent reviews are permitted.

Giving the tenant an option:

While the landlord cannot require a tenant to make a prohibited payment, the tenant could be given the option of making a payment for example, as an alternative to complying with another requirement if that is reasonable. So, instead of the tenant being required to pay a cleaning fee at lease expiry the tenant could be given the option of returning the property in a clean condition or else paying a cleaning fee.

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