If you live in a rented property, or rent a property out, it is likely that you have heard that there was due to be a shake-up in the types and levels of fees that can be charged in relation to an Assured Shorthold Tenancy. The Tenant Fees Act 2019 was made law on 12th February 2019 and has placed numerous restrictions on what can and cannot be charged in relation to a tenancy.
Under this new Act, letting agents are no longer able to do the following for tenancies entered into on or after 1st June:
- Seek excessive deposits - if the rent is less than £50,000 per annum the maximum deposit that can be collected is the equivalent to 5 weeks' rent. If the rent is over £50,000 per annum then this is increased to 6 weeks' rent;
- Seek excessive, or multiple, holding deposits - any deposit to secure the property prior to the agreement being entered into can be no more than one week's rent;
- Attempt to charge letting fees by disguising them as a topped up initial rent payment;
- Charge unjustified or unreasonable "default" fees - i.e. if replacement keys are required, or the tenant makes a late rental payment for example, the landlord/agent can only charge their reasonable costs which are to be evidenced in writing;
- Charge more than £50 or the "reasonable costs" of making changes to the tenancy requested by the tenant - i.e. variation, assignment or novation;
- Charge a tenant a "fine" for terminating the lease early, if the landlord cannot demonstrate they have suffered loss; or
- Charge a premium for supplying service connections for communications - i.e. telephone lines and internet.
If a landlord or its letting agent is found to have charged any of the above in breach of the new Tenant Fees Act 2019 then there are a number of potential consequences. Firstly, the tenancy may not be binding on the tenant; there could be financial penalties (up to £30,000); there could be a banning order; and/or finally, the landlord will be unable to terminate the tenancy until such prohibited payment has been returned to the tenant. It is easy to appreciate that either the tenancy being unenforceable or the landlord being unable to terminate it in the alternative, could have a significant effect on a landlord and so it is important to ensure that if you do rent residential property out you are careful to avoid any of these prohibited payments. Such payments could be collected by the letting agent, rather than the landlord themselves, and still lead to these consequences.
If you require any further guidance on this matter, or any other landlord and tenant related issues, please feel free to contact Michael Callaghan, Partner in the Dispute Resolution department on 01245 228136 or firstname.lastname@example.org.
This is not legal advice; it is intended to provide information of general interest about current legal issues.