Residential Property Partner Melanie Verth gives an overview of the Tenant Fees Act 2019.
The Tenant Fees Act 2019 came into force on the 1 June 2019. The purpose of the Act was to divide fees charged by Landlords and Agents of properties within the private rental sector e.g Assured Shorthold Tenancies (AST’s) and student lets into two categories: Permitted and Prohibited.
Since 1 June 2019 all new tenancies must adhere to the new regulations and if a tenancy does not comply then severe penalties will follow. Landlords and Agents therefore must ensure that they are aware of the requirements.
What fees can be charged under the Act?
The list of Permitted fees is clear and specify what the Tenant can be charged for:
- A refundable holding deposit
- Tenancy deposit
- Charges for changes to the tenancy
- Council Tax, TV Licence fees and communication fees
- Early termination of tenancy fees
- Default fees for late payment of rent and replacement of locks or security fobs
Although a Permitted fee may be mentioned above, care must be taken to ensure that the level of fees charged falls within the Act. Specific levels of fees are prescribed or noted in the Act and guidance, and if any fees are not supported by evidence of cost and/or are not seen as reasonable then a breach of the Act may have occurred.
What fees are prohibited by the Act?
Any fees which are not on the Permitted list are seen as Prohibited. Landlords and Agents will not be able to charge for these fees. As an example Prohibited charges include fees for:
- Property viewings
- Obtaining references
- Administration charges
- Guarantor fees
- Inventory checks
- Right to Rent checks
- Fees in relation to consent to pets
- Renewal fees
- Professional end of Tenancy cleaning
- Third party fees
- Gardening fees
What happens if there is a breach of the Act?
A breach of the Act will usually result in a civil financial penalty, which can be a fine of up to £5,000. However, if it is found that a Landlord is responsible for multiple breaches or further breaches within 5 years of the original breach then a criminal offence is committed. This could lead to a banning order under the Housing and Planning Act 2016 and could lead to an unlimited fine and potential listing on the database of Rogue Landlords.
In addition to the potential penalties, the Landlord will also be required to repay any sum paid back to the Tenant. There may also be interest payable in relation to this sum. The Act empowers Tenants in relation to their rights concerning fees and there is a lot of Government guidance available to Tenants with template letters providing an inexpensive and simple way of ensuring that Landlords and Agents can be pursued easily if in breach.
Action points for landlords and agents
Landlords and Agents should urgently review fees charged in relation to Tenancies if they have not already done so. Prohibited fees written into Tenancies entered into prior to the 1 June 2019, can still be collected until 31 May 2020.
After 1 June 2020, terms written into existing Tenancies will no longer be binding. If payments are requested in error and payment received the fees should be returned within 28 days to the Tenants. If payments are not returned within this timeframe then it will be seen as collection of a Prohibited fee and a breach of the Act.
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