What landlords need to know about the Tenant Fees Act

With effect from 1st June 2019 most fees charged by Landlords and Agents are banned or referred to as Prohibited Payments. These bans cover most tenancies, including Assured Shorthold Tenancies.

Here’s what the changes mean:

Late Payment of Rent

  • Landlords can now only charge a late payment fee once their tenant is 14 days late in paying their rent;
  • Any late payment fee the landlord wishes to charge tenants must be expressly set out within the tenancy agreement and landlords cannot charge more than 3% above the Bank of England rate;
  • Tenants can be charged either by their Landlord or the Landlord’s Agent – not both.

Tenants can no longer be charged for:

  • Referencing;
  • Administration;
  • Credit and immigration checks.

If a Landlord demands a Prohibited Payment and the Tenant pays this, the Landlord can’t use the Section 21 procedure under the Housing Act 1988 to evict the tenant until the money is repaid.

A landlord can still charge Tenants for utilities such as gas, electricity and water if the Landlord provides these. However, a Landlord cannot charge the Tenant more than they pay the supplier.

What about Tenancy Deposits?

  • A tenancy deposit remains as a permitted payment. However, Landlords can now only demand a tenancy deposit of a sum of up to the equivalent of 5 weeks rent (if the annual rent does not exceed £50,000.00).
  • In respect of holding deposits, Landlords and Agents can only demand a payment of up to the equivalent of 1 weeks rent.

Does this affect all Tenancy Agreements?

The Tenancy Fees Act 2019 applies to all tenancies entered into on or after 1 June 2019.

Landlords and Agents do not need to repay prohibited payments that have been charged to a tenant before 1 June 2019. Where a tenancy agreement was entered into before 1 June 2019, Landlords and Agents are still able to charge fees until 31 May 2020 – but only where such fees are required under the existing tenancy agreement. From 1 June 2020, the ban on fees will apply to all applicable tenancies in the private rented sector.

More information on tenancy agreements and best practice is here

For further information and advice get in touch with us directly, either by calling 0800 118 1500, or contact Josh Millichamp by email to find out how we can help you today.