The Tenant Fees Act 2019 (‘the Act’) came into force from 1 June 2019, the Act initially applied to all new assured shorthold tenancies granted on or after 1 June 2019 but now after the 12 month transitional period apply to all tenancies regardless of when they were entered into.
The key provisions of the Act restrict the kinds of payments that landlords and letting agents can require and prohibit certain arrangements in connection with the letting of housing in England. It also sets limits on the amount of money that can be demanded as a security or holding deposit.
Permitted and prohibited payments
Under the terms of the Act, landlords and letting agents must not require tenants (including prospective tenants and guarantors) to make any prohibited payments.
The Act does not set out details of the payments that will be prohibited under the Act. Instead, it lists the payments that will be a “permitted payment” and any payment that is not a permitted payment will be deemed a “prohibited payment”.
Permitted payments are set out in Schedule 1 of the Act.
A rent payment that is higher than the payment due for a similar period later in the term is not permitted.
A deposit payment is permitted subject to the condition that the sum is no more than five weeks' rent where the annual rent for the tenancy immediately after its grant, renewal or continuance is less than £50,000 or no more than six weeks' rent where the annual rent for the tenancy immediately after its grant, renewal or continuance is £50,000 or more.
A holding deposit is a permitted provided that it does not exceed one week’s rent, and provided that the landlord or agent does not already hold a deposit for the same property.
There are permitted payments for loss of keys and the late payment of rent before the end of the period of 14 days beginning on the date on which the payment is required to be made and further and only where the tenancy agreement requires payment of the same.
Any payment must reflect the reasonable costs incurred by the landlord and details of the costs must be given to the tenant in writing.
Payments to vary or assign a tenancy
This will be a permitted payment but only if the fee is less than £50 or reflects the reasonable costs of the landlord.
Payment on termination of a tenancy
A payment to terminate the tenancy before the end of the fixed term or without the requisite period of notice is permitted; the amount recoverable is limited to reasonable costs or losses.
Council tax and utilities
A payment to cover council tax and/or utilities (electricity, gas or other fuel or water or sewerage) is a permitted payment.
A payment for a TV licence is a permitted payment, provided that the tenancy agreement requires the payment to be made.
A payment for communication services is a permitted payment, provided that the tenancy agreement requires the payment to be made, subject to the usual reasonable costs restriction.
Penalties for non-compliance
- A provision in a tenancy agreement that purports to recover a prohibited payment from a tenant will be unenforceable the agreement will however continue to have effect in every other respect;
- The enforcement authority may take steps to force the repayment of any prohibited payments together with interest;
- The tenant may apply to the First Tier Tribunal to recover any prohibited payments together with interest;
- A landlord or letting agent that requires a tenant to make a prohibited payment may face prosecution and payment of a fine of up to £5,000, or up to £30,000 if that person has committed a similar offence in the previous 5 years;
- A landlord that is in receipt of a prohibited payment will not be able to serve a section 21 notice until the prohibited payment is repaid to the tenant.
Get in touch with us, whether you are a landlord or a tenant, if you require any further advice concerning the Tenant Fees Act 2019 or have any queries concerning your tenancy.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.