How does the Tenant Fee Ban affect you as a Landlord?

10th May 2019

The letting industry has been firmly under the spotlight of the current government over the past few months and on the 1st June 2019 the Tenant Fees Bill became the latest law to pass through parliament that will put an end to unregulated fees; saving tenants an estimated £240 million a year, according to government figures.

Initially announced in the House of Lords in January 2019, the Tenant Fees Bill means that landlords and letting agents will no longer be able to charge admin fees on tenancies signed on, or after 1st June 2019. However, after a year the bill will apply to pre-existing tenancies and any tenancy agreement clauses charging fees will become ineffective. Here is an overview of how as a landlord it will affect you:

 

Under the new Tenant Fees Bill, landlords and letting agents will only be allowed to charge tenants for:

Rent

Rent will be payable as usual, although there will be restrictions in place including a ban on offsetting extra costs by charging a higher rent for the first half of the tenancy and then reducing afterwards. If you wish to increase your rent that is permittable as long as it remains the same amount throughout the tenancy. It’s worth noting before you make any decisions, that increasing the rent might put off current tenants renewing their tenancies and deter perspective tenants from signing up in the first place.

Holding deposit

A holding deposit is a sum of money paid to reserve the rental property before they officially sign a tenancy agreement. Within the Tenant Fees bill, holding deposits will now be refundable and up to the value of one week’s rent.

Deposits

Tenancy deposits will be capped at six weeks rent and will now be refundable. Where the annual rent amount is lower than £50,00 the deposit will be a maximum of 5 weeks rent, and for annual rent greater than £50,000 the maximum deposit amount will be 6 weeks rent.

Tenancy agreement changes

Changes or early termination of a tenancy as requested by the tenant and agreed by the landlord will now be capped at £50 unless you can prove that higher costs were incurred.

Agreed fees

As well as the rent and deposits listed above, landlords and lettings agents will only be permitted to charge tenants fees that are associated with utility bills, council tax and defaults by the tenant, such as late rent payment fines or replacing lost keys.

 

Here are the fees that will be banned after the 1st June:

  • Credit checks
  • Inventory checks
  • Cleaning services – both domestic and professional
  • For taking up references and guarantor forms
  • Administration costs
  • Requirements to have specific insurance providers
  • Gardening provisions

What are the financial penalties if banned tenant fees are charged?
Where a breach has occurred and a banned fee or payment is taken by a landlord or letting agent, tenants will be able to get any money wrongly taken paid back via the county court. It’s worth noting that the landlord or letting agent may be charged interest on this from the day that the prohibited payment was taken.

In addition, there’ll be a financial penalty of up to £50,000 for the first offence which will be enforced by Trading Standards. Do so again, and you could face criminal charges or be forced to pay up to £30,000 and be subject to a banning order.

 

What happens next?

Applicable for both landlords and letting agents, the Tenant Fees bill is just one of the 178 pieces of legislation that as a landlord and letting agent we are required to enact and consider when letting and managing properties to ensure compliance.

As a leading ARLA Propertymark registered letting agent, our qualified team of experts are here to offer professional advice on how best to ensure you are complying with the new legislation. We will help guide you through the process, start to finish, ensuring peace of mind.

To find out more about the Tenant Fees Bill and how our tailored landlord services could help you, please contact your local team of Lettings experts or call 01903 213 111 for Worthing and the surrounding areas or 01903 756 688 for Lancing and the surrounding areas to speak with one of our friendly team.

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