In June 2019, The Tenant Fees Act was first introduced in England and now one year on, its powers have now been extended to apply to all existing tenancies.
When it came into force last year, the Act only applied to new tenancies created from that point onwards, plus some selected renewals. In order to give existing tenancies time to adapt to the new requirements, a 12-month transition period was granted, which officially came to an end on the 1st June 2020.
The Act, which has also been described as a ‘fees ban’, prevents both landlords and letting agents from charging additional fees outside of rent, deposits, holding deposits and default charges. Additional charges that are no longer permitted include those for cleaning, pets, referencing, inventories and any other administration fees.
There are also limits on the amount that can be requested for security deposits, which must equate to no more than five weeks rent or six weeks if the annual rent exceeds £50,000 and no more than 1 weeks rent for holding deposits. If any variations to the tenancy are required, fees must now be capped at £50 unless it can be shown that higher costs were reasonably incurred in the process. Fee caps on additional payments for early tenancy terminations, utilities, communications, TV licenses, council tax, late payments and replacement keys are also now covered by this Act.
It is vital that you review your tenancy agreements in detail to ensure they remain compliant, as there are very real consequences for not doing so. In order to ensure widespread compliance with the new Act, there are civil penalties of up to £5,000 for each offence, Larger financial penalties could be as much as £30,000, and there is also the possibility of receiving a banning order or criminal prosecution.
It is also worth noting that if any fees are applied in error, the landlord will be prevented from serving a Section 21 notice for possession until any overpayments have been paid back to the tenant in full.
The Tenant Fees Act applies to landlords in England only, and there is a different fees ban in Wales. There are some slight variations between the two, so if you also have properties in Wales, a different approach may be required for these.
At Paige & Petrook, we have been preparing for this change since it was first introduced in June of last year, and can provide help and guidance for any of our clients who are concerned about their tenancy agreements in light of the Act.
Please do get in touch if you would like to discuss the impact of The Tenants Fees Act on your rental property.