Tenant fees ban is now in force14th June 2019
The Government’s ban on letting agent fees is now in force. Sukhi Mills, solicitor from our Exeter office, tells us more about what this means for tenants and landlords.
This news has been welcomed by millions of people across the UK as a fairer system for tenants. As of 1st June 2019, anyone entering into a new tenancy agreement or renewing an existing one cannot be charged for ‘unfair fees’ including credit checks, referencing, inventories, guarantor forms or administration charges.
Any landlords or agents charging these fees are now breaking the law and could face serious penalties, incurring fines of up to £5,000 for a first offence. If they break the rules again within five years, they face an unlimited fine.
However, for the millions of tenants who entered into and remain within a tenancy agreement agreed before 1st June 2019, there will be no immediate change for them as it will not become law for existing contracts until 1st June 2020. All banned fees for services included in the contract can be charged for up until that date.
After 1st June 2020, any term in a tenancy which requires tenants to pay fees will no longer be binding, so tenants won’t need to pay them regardless of what the tenancy agreement says or when it was signed.
Exactly what payments are still permitted?
- Rent – The initial rental amount must not exceed subsequent amounts. This prevents landlords from front loading the initial rental payment with any fees that are now otherwise banned
- Tenancy Deposit (refundable) – This must be no more than 5 weeks’ rent if the annual rent is under £50,000 or 6 weeks’ rent if the annual rent is over £50,000
- Holding Deposit (refundable) – This is limited to 1 week’s rent (if agreed by both parties it could be applied to the first month’s rent or deposit)
- A default fee for a late payment of rent or replacement of a lost key or security device
- Payments to change the tenancy when requested by the tenant – This is limited to £50 or the reasonable, evidenced costs of the landlord, whichever is greater
- Termination of the tenancy when requested by the tenant – This will be for the actual loss suffered by the landlord
- Utilities, TV licence and communication services – These can only be charged if specified in the tenancy agreement
The new law is intended to be fair to all parties and both tenants and landlords should make themselves fully aware of these new rules and know their rights.
Tenants can challenge their landlord or agent if they try to charge a banned fee. The trading standards team at the local council is responsible for enforcing the Act. It is also possible to claim back banned fees through the First-tier Tribunal. It would be wise to get legal advice before doing this.
Landlords need to ensure that they are completely compliant with the new law to avoid breaking it. This law in no way removes any legal rights the landlord has if a tenant were to breach a term in the tenancy agreement, such as not paying rent or damaging the property.
If you would like up to date legal advice regarding your tenancy or property, get in touch with Sukhi or her colleague Mark Perry, both of whom specialise in Landlord and Tenant disputes on 01392 424242 or email .