No more hidden fees for residential tenants

Karen Bright, Partner at Bishop & Sewell updates us on the Tenant Fees Act 2019

As from the 1st June 2019 new legislation will prohibit residential landlords and agents from charging excessive fees to current and prospective tenants. The Tenant Fees Act 2019 (the Act) came into force on 1st June 2019. The Act aims to implement the Government’s intention to ban certain fees and to improve fairness, competition and affordability in the residential lettings sector. It is part of a wider package of measures aimed at ensuring that landlords and agents deliver more good quality and affordable private housing.

Landlords and letting agents will be prohibited from charging certain fees to existing and prospective tenants of assured shorthold tenancies and student accommodation in England, except for certain “permitted payments”. The Tenant Fees Act does not cover long leases (more than 21 years), social housing or holiday lets.

The Act prohibits all payments except those specifically allowed. In particular, landlords and letting agents can no longer:-

  1. Seek excessive deposits;
  2. Charge a tenant a fee as a “fine” for early termination of a lease where the landlord is unable to show loss;
  3. Charge a premium for supplying communication services, such as internet and telephone connections;
  4. Charge a viewing fee;
  5. Require the tenant to pay for inventory checks, check out fees, reference fees, third party fees such a professional cleaners.

A landlord is allowed payment for the following:

  1. Rent;
  2. Deposit, this is now limited to 5 weeks rent if the annual rent is under £50,000.00 and 6 weeks rent if annual rent exceeds £50,000.00;
  3. Its reasonable costs up to £50.00 where it deals with a tenant’s request to vary, assign or novate a tenancy agreement;
  4. A holding deposit of up to one week’s rent but there are conditions for this;
  5. Capped default fees.

The Act will apply to all Assured Shorthold Tenancies (ASTs) from 1st June 2020.

If a landlord and/or its agents are found charging prohibited fees the penalties include:

  1. For a first offence – Fines up to £5,000.00 per offence;
  2. Subsequent Offences – Fines up to £30,000.00 or a court order banning them from letting properties for a year or criminal prosecution if the same offence is committed within 5 years;
  3. Tenancies are not binding on the tenant;
  4. Until the prohibited fees are returned to the tenant, the landlord will be unable to terminate an assured shorthold tenancy.

If you are a landlord, tenant or letting agent and you require further advice on any of the issues raised in this article, please contact our expert Litigation & Dispute Resolution team on or telephone 020 7631 4141.