Stop Press – law on tenant fees about to change
To whom does it apply and what are the primary changes?
• The Act will apply to the majority of the private rented sector in England – including assured shorthold tenancies, tenancies of student accommodation and licences to occupy.
• Landlord and agents cannot require tenants to make loans or enter into contracts for services or insurance, except contracts for utilities and communications.
• Landlords or agents are prohibited from charging tenants any fees or other payments which are not included in the exclusive list of permitted charges/payments listed below.
What are the permitted charges/payments?
• A refundable tenancy deposit – capped at five weeks’ rent if the annual rent is less than £50,000 per annum
• A refundable holding deposit capped at no more than one week’s rent
• A default fee for late payment of rent or loss of keys, where required under a tenancy agreement
• Variation, assignment or novation of the tenancy at the tenant’s request capped at £50 or reasonable costs incurred if higher
• Payments associated with early termination by the tenant
• Payments in respect of council tax, utilities and TV licence.
What are the key dates?
• The Act will apply to all new and renewal tenancies and licences (excluding periodic tenancies) from 1 June 2019.
• From 1 June 2020, the Act will apply to all tenancies and licences – existing and new.
What are the consequences of non-compliance?
• Any tenancy which breaches the restrictions will not bind the tenant or the licensee
• The excess of security deposits currently held must be returned to tenants
• Landlord or agent could face a fine of up to £5,000 for a breach;
• A second breach within five years will be a criminal offence and could result in a fine and a banning order, preventing the letting of properties for a minimum of 12 months
• Tenants and licensees can pursue the landlord or agent for any amounts paid (plus interest)
• Note in particular that Landlords will be unable to recover possession of their property via the section 21 eviction notice whilst they are holding prohibited payments.
• Ensure all new agreements/renewals entered into from 1 June 2019 only request permitted payments; and
• For all existing tenancies, carry out a thorough review of all payments received under that tenancy and ensure they constitute a permitted payment. Make arrangement for any payments which fall outside that list to be repaid to the tenant before 1 June 2020.
When conducting the review of payments, particular attention should be paid to:
• Any payments received as a penalty for breaching university regulations/procedures, for example disciplinary fines
• Payment of rent including insurance cover with a third party provider; and
the default fees charged for replacing keys/security fobs. The fee must be the reasonable cost incurred and a tenant can refuse to pay it unless written evidence, in the form of an invoice or receipt, is provided.