The Tenant Fees Act 2019 came into force on Saturday 1 June 2019 for all assured shorthold tenancies entered into after this date, with a transition period of 1 year for existing ASTs.
This has met with the approval of tenants and housing charities, but what does it actually mean for landlords?
In effect, the Act prohibits all payments other than:
A deposit (more on that below)
Interest for late payment of rent
Fees for lost keys and fobs
Fees for changes to the tenancy (for instance, adding or removing tenants)
Any loss suffered by the landlord from early termination by the tenant
Council tax, utilities and other bills (where these are paid by the landlord)
Items which landlords and agents have traditionally charged but which are now banned include:
Preparation of an inventory on arrival or departure
Credit and immigration checks
Fees for renewals of tenancy agreements
In addition, the amount of the deposit a landlord can charge is limited to five weeks' rent where the rent is less than £50,000 per year or six weeks' rent where it is more. A landlord may also charge a holding deposit while it agrees a tenancy agreement with a prospective tenant and carries out its right to rent checks. During this time the landlord should take the property off the market and the amount of the holding deposit is capped at 1 week's rent.
The consequences for a landlord who charges prohibited fees can be serious. A tenant can recover the prohibited fees from the landlord in court and the breach of the Act is an offence with, potentially, an unlimited fine. Moreover, local authorities, which have a duty to enforce the Act, are able to put landlords who repeatedly charge prohibited fees on a "rogue landlords" list and prevent them from letting their properties.
Finally and perhaps most importantly for landlords, a landlord who charges a prohibited fee cannot serve a Section 21 Notice to obtain possession of its property. If it wishes to do so it must repay all the prohibited fees which it has charged. Although the government has issued a consultation paper to explore proposals to remove the section 21 ("no fault") procedure, it is still the preferred method for a landlord to obtain possession.
If you require more information on permitted and prohibited fees, or on our fixed fee possession service, please contact either Hollie Wright or Edward Ng-Cordell.