Tenants Fees Act extended to cover existing tenancies
The Tenant Fees Act came into force in England last year, and from today (Monday 1st June) it has a wider application for tenancies in England.
The law means that landlords and letting agents cannot charge fees other than rent, deposits, holding deposits and charges for defaulting on the contract – with additional restrictions on how much tenants must pay. The full list of permitted payments can be read further down in this article.
When the fees ban was first introduced last June, it applied to new tenancies created after that date and some renewals.
There was a one year transition period attached to the legislation for existing tenancies-and this has now come to an end, meaning the legislation now applies to existing tenancies(Assured short-hold tenancies) as well.
- Landlords in both England and Wales should read their tenancy agreements to identify the type of periodic tenancy that their tenancy will run on as. If the tenancy has a contractual periodic continuation of the existing tenancy then they will likely not be caught by the ban even if their periodic tenancy starts after the commencement date.
- However statutory periodic tenancies or contractual periodic clauses that specify a separate periodic contract is created will definitely be caught.
Do I need to pay excess deposit back if my tenancy was renewed before May 2019? Read our recent call of the week.
What fees are banned?
In practice, this means that from 1st June 2020, landlords and letting agents in England can not charge for ‘extras’ such as cleaning, pets, referencing, inventories and admin.
The amount landlords can charge for security deposits or holding deposits is also limited under this piece of legislation.
- Security deposits are limited to five weeks’ rent (unless the annual rent for the property exceeds £50,000) in which case the deposit is capped at six weeks’ rent.
- Holding deposits are limited to one weeks’ rent
What fees can still be charged?
According to the legislation, the only fees that can be charged are:
- rent
- a refundable tenancy deposit capped at no more than 5 weeks’ rent where the total annual rent is less than £50,000, or 6 weeks’ rent where the total annual rent is £50,000 or above
- a refundable holding deposit (to reserve a property) capped at no more than 1 week’s rent
- payments associated with early termination of the tenancy, when requested by the tenant
- payments capped at £50 (or reasonably incurred costs, if higher) for the variation, assignment or novation of a tenancy
- payments in respect of utilities, communication services, TV licence and Council Tax
- a default fee for late payment of rent and replacement of a lost key/security device giving access to the housing, where required under a tenancy agreement
Big penalties for non-compliance
Landlords who do not comply with this legislation could face financial civil penalties of up to £5000 for each offence, with larger financial penalties reaching up to £30,000. Other penalties for non compliance include a banning order or even criminal prosecution.
Additionally, if a prohibited fee has been charged when it should not have been then this will impair a landlords’ ability to successfully serve a Section 21 notice for possession until the prohibited payment has been paid back to the tenant in full.
Wales’ tenant fees ban The Tenant Fees Act applies to landlords in England only, but there is a different fees ban in Wales, which was introduced on 1st September last year under the Renting Homes (Fees etc) (Wales) Act 2019. There are some differences between the two pieces of legislation which you can read about in this fees ban matrix put together by the Tenancy Deposit Scheme.
- To read more information about the tenant fees ban in England read our guidance for members here.
