Tenant Fees Act. What is involved?

Tenant Fees Act explained

The Tenant Fees Act applies to all tenancies in England from Monday 1 June 2020 Landlords, under the Tenant Fees Act 2019 you are banned from charging renters any fees apart from those specified in the legislation. That's rent, tenancy deposits, holding deposits, and any default charges that are specifically stated plus a few others we list below. The Act came into effect in England on 1 June 2019 with a one-year transitional period, which exempted existing tenancies from the new rules. So from Monday 1 June 2020, all assured shorthold tenancies and HMO licences are subject to the legislation. The legislation also introduced a deposit cap that limits deposits to five weeks’ rent (or six weeks if the annual rent is £50,000 or more). To remind landlords of the rules, here’s a list of allowable charges:

· A refundable deposit

· A refundable holding deposit - capped at one week’s rent

· Rent, utilities, communication services, TV licence, and council tax

· Fees for changing or ending a tenancy at the tenant’s request

· Default fees for late payment of rent

· Fees for replacing a lost key or security device, where required under a tenancy agreement and with evidence of the cost in the form of a receipt or invoice.

Fees can't be charged on anything that isn’t on the list above, including:

· Credit checks

· Inventories

· Cleaning services/professional cleaning

· Referencing

· Admin charges

· Gardening services

Landlords and agents do need to read the small print - or in this case, the Act - because there are some other changes you will need to know about. Go to https://www.gov.uk/government/collections/tenant-fees-act to see the Act in full. There are now several limitations on the way rent is paid.

Holding and tenancy deposits are capped at one week’s rent and five or six weeks' rent accordingly and it is not acceptable to ask for an additional deposit to be paid by renters with pets. It is permissible though to charge a higher rent if a tenant moves in with their cat, dog, or rabbit. Fees are still allowed for replacing lost keys or electronic fobs but charges must now be evidenced in writing to demonstrate that they are reasonable.

Landlords and agents are also still able to charge interest on overdue rent but the caveat here is that the fee only kicks in when the rent is more than 14 days late. Interest can only be charged at 3% above the Bank of England’s annual percentage rate for each day the rent is outstanding. Tenants can no longer be charged a penalty for contractor call outs or missed appointments but deductions can be made from the tenancy deposit if there is a clause in the tenancy agreement that has been broken, such as not returning the property to the state it was in at the beginning of the tenancy.

Charges can also be made for work or repairs that are deemed necessary before the end of the tenancy if the damage is the fault of the tenant and the landlord or agent needs to provide accurate evidence of any costs incurred. To be certain that landlords understand the new rules, ARLA has developed a toolkit that explains the new legislation in detail. Go to https://www.arla.co.uk/tenant-fees/ to download a copy. Later in the week, we will take a look at the industry response to the new Act and ask whataskbe the likely impact is on landlords and agents.

If landlords charge for anything that isn’t on this list that's a breach of the legislation. This carries a fine of up to £5000. And even worse, if you break the rules again within five years of being fined the first time, that counts as a criminal offense and offense an unlimited fine. So make sure you understand the new rules. For a full list of charges that are now banned under the legislation, you can read the Government guidance in full here.

Finally, it’s worth remembering that any deposit taken before 1 June 2019 that was higher than the five or six-week cap that is now in place, doesn’t need to be refunded immediately. Instead, renters should receive a refund at the end of the tenancy. The new tenancy deposit cap will apply to any new tenancy agreed after this.upon www.tenancy-agreements-made-easy'>planetrent.co.uk Why not READ our Property Blog too at www.ringleypropertyblog.co.uk