Tenant Fees Act 2019
The Tenant Fees Act became law on 1st June 2019 and sets new rules for fees chargeable to tenants signing tenancy agreements from 1st June 2019 onwards.
What does it mean for me as a tenant?
As a tenant you will no longer be charged for fees relating to setting up, renewing or continuing a tenancy.
You will still be responsible for the following costs for a tenancy, these are all ‘Permitted Payments’ under the Tenant Fees Act:
- The Rent
- A Refundable Holding Deposit (capped at 1 week’s rent)
- A Tenancy Deposit (Refundable at the end of the tenancy) (capped at 5 weeks rent for tenancies of less than £50,000 per annum)
- Payments in the event of a default, chargeable at £50, or the reasonable costs incurred (evidenced by receipts and invoices if > £50) e.g. losing keys, or failing to pay the rent (chargeable at 3% above Bank Base Rate for each day the rent is late, the charge can be applied for payment by the tenant after the rent is 14 days late, from the point it was first late)
- Payment where you request a variation to the contract
- Payment where you terminate the tenancy early (surrender)
- Payments for utilities, council tax, television licencing, communication services or Green Deal charges
Other charges and payments are ‘Prohibited’ and anything that exceeds the above capped values, or is charged when it is not Permitted, will be considered a ‘Prohibited Payment’ and must be returned to you as tenant within 28 days.
Damages to a property during the tenancy will still be chargeable to you as the tenant where it is caused by you, your visitors or family etc., and these will be deductible from your deposit as detailed in your tenancy agreement. These damages may include things like damages to furniture, blocked drains caused by tenant misuse, damage to white goods, doors and fixtures and fittings etc.
I paid a holding deposit, how do I get it back?
Under the Tenant Fees Act 2019, a holding deposit of up to 1 weeks rent can be taken by a landlord or their agent to allow a property to be held for consideration for a tenancy, this is held whilst the tenant checks are carried out and the offer considered.
The landlord / agent and the tenant have a deadline of 15 days to come to agreement for the commencement of a tenancy after taking the holding deposit (or a longer period if separately agreed for an extension), and must organise to sign a tenancy agreement during that time or release the holding deposit.
Where a tenancy agreement is agreed and entered into following the taking of a holding deposit from the tenant, the holding deposit is returnable to the tenant, albeit that the holding deposit may be ‘repaid’ towards the first month’s rent, or deposit if the tenant and landlord / agent have agreed this in writing.
The holding deposit must also be returned to the tenant if:
- The landlord / agent decides before the deadline for agreement not to enter into a tenancy agreement with the tenant applicant
- The landlord and the tenant fail to enter into an agreement together before the deadline
The holding deposit may be retained by the landlord / agent if:
- The tenant fails a Right to Rent check, regardless of when the deposit was accepted
- The tenant provides false or misleading information to the landlord or letting agent, which the landlord is reasonably entitled to consider in the decision to grant a tenancy and this materially affects their suitability for renting the property
- The tenant notifies the landlord or agent before the deadline for agreement that they no longer wish to enter into a tenancy agreement
- The tenant fails to take all reasonable steps to enter into the tenancy agreement
Transition Period comes to an end on 31st May 2020
Where tenancies were already in place prior to 1st June 2019, a transition period applied, but this comes to an end on 31st May 2020, meaning any tenancy clauses on existing contracts that charge fees are unenforceable from 1st June 2020 onwards
Any breach of the fee ban will incur a penalty of upt to £5000, and successive breaches can reasult in a criminal offence & an unlimited fine.
With effect from 1st June 2020, the fee ban applies to all tenancies, be they Fixed Term or Periodic, regardless of when they started.
For older tenancies pre-dating the Tenant Fees Act, if the deposit held and taken was greater than the new Act cap ( 5 weeks for most tenancies) the additional deposit above the cap does not need to be immediately refunded, however when the tenancy is renewed with a new fixed term the new deposit limit must be applied and the balance returned to tenants to ensure compliance.
A Section 21 notice cannot be issued where the tenancy has Prohibited Payments in breach of the Act.