Landlord Update: Tenant Fees Act 2019 comes into force 1 June 2019

The ban on tenant fees in the Tenant Fees Act 2019 (TFA 2019) will come into force on 1 June 2019 and introduces protections for most residential tenancies in the private rented sector in England.

 

What is the aim of the Act?

The aim of the Act is “to reduce the costs that tenants can face at the outset, and throughout, a tenancy, and is part of a wider package of measures aimed at rebalancing the relationship between tenants and landlords to deliver a fairer, good quality and more affordable private rented sector.”

 

Who does the ban apply to?

The ban applies to all assured shorthold tenancies (except social housing or long leases), tenancies of student accommodation and licences to occupy housing in the private rented sector in England.

 

What fees are permitted?

Landlords and letting agents can require tenants to make the following permitted payments (subject to certain conditions and caps):

  • Rent.
  • Tenancy deposit (capped at five weeks' rent if annual rent is less than £50,000 or six weeks' rent if annual rent is £50,000 or more).
  • Holding deposit (capped at one week's rent).
  • Payments on certain default events (loss of key or security device, failure to pay rent or breach of the tenancy).
  • Fee for the variation, assignment or novation of the tenancy (capped at £50 or reasonable costs).
  • Payment on early termination of the tenancy.
  • Council tax.
  • Utilities (electricity, gas, other fuel, water or sewerage).
  • TV licence.
  • Payments for landline phone, internet and cable or satellite TV.

What fees are banned?

The TFA 2019 prohibits all payments in connection with a tenancy except payments which are expressly permitted. Landlords and letting agents are prohibited from requiring tenants (and anyone acting on a tenant's behalf or guaranteeing the tenant's rent) to make any payment which is not expressly permitted.

 

Examples of banned payments include:

  • Tenancy set-up fees.
  • Viewing fees.
  • Credit-check fees.
  • Inventory check fees.
  • Check-out fees.
  • Fees for professional cleaning services.

What are the financial penalties if a Landlord or Letting Agent commits a breach?

A breach of the legislation will usually be a civil offence with a financial penalty of up to £5,000, but if a further breach is committed within 5 years of the imposition of a financial penalty or conviction for a previous breach this will be a criminal offence.

The penalty for the criminal offence, which is a banning order offence under the Housing and Planning Act 2016, is an unlimited fine. Where an offence is committed, local authorities may impose a financial penalty of up to £30,000 as an alternative to prosecution. In such a case, local authorities will have discretion whether to prosecute or impose a financial penalty. Where a financial penalty is imposed this does not amount to a criminal conviction.

A breach of the requirement to repay the holding deposit is a civil offence and will be subject to a financial penalty of up to £5,000.

 

Is there Guidance available on this forthcoming legislation?

Yes, the government has published guidance for tenants, landlords and letting agents to help explain their rights and obligations under the TFA 2019.

 

Summary

The legislation will create a seismic shift in the way Letting Agencies and Landlords operate. For any Landlords who are unsure of their options please contact our commercial team at commercial@amdsolicitors.com or 0117 9733989 for further information.


This article is provided for general information purposes only and represents our understanding of the relevant law and practice as at the date of uploading. This article should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.


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