The Tenant Fees Act 2019 came into force on 1st June 2019. It introduced a cap on tenancy deposits, and it banned landlords and letting agents in England from charging tenants’ fees, except for fees which are allowed under the Act. There are financial penalties for breaching the ban.
Most landlords and agents will by now be accustomed to what may be charged to tenants, but if a reminder is needed, Gov.uk guidance can be found here https://www.gov.uk/government/publications/tenant-fees-act-2019-guidance
To recap, the key points are:
- Tenancy Deposits not to exceed the equivalent of five weeks’ rent (unless the annual rent is more than £50,000 in which case the cap is six weeks’ rent).
- A cap on Holding Deposits of not more than one week’s rent.
- A cap of £50 on the amount charged for a change to a tenancy (unless the landlord can show that greater costs were incurred).
- Agents and landlords can only charge tenants rent, deposits and fees associated with change or early termination of tenancy when the tenant requests it, utilities, communication services and Council Tax, and payments due to the tenant’s default for example lost keys or fob, or for late rent payment (which must not be more than 3% above the Bank of England base rate).
In the first year of the Act there was a transition period during which it did not apply to fees that were agreed and written into existing tenancy agreements.
However, that transition period ceased from 1st June 2020 and the Act now applies to all private residential tenancies, even existing tenancies where the fees were agreed as part of the tenancy agreement. For example, if there are check-out fees those are no longer payable by the tenant. For deposits, the cap on deposits now applies to all ASTs and licences. The landlord should now repay any banned fees that were paid up-front. However, they do not have to refund any deposit monies in excess of the cap that was taken before 1st June 2019, these can be refunded at the end of the tenancy in the usual way.
If landlords are looking to serve a Section 21 Notice, they should check that any prohibited payments or holding deposits have been repaid first, otherwise, the notice will not be valid.