Tenant Fees Act 2019: what does it mean for landlords and tenants?

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The Tenant Fees Act 2019 may be welcome news for tenants but not such good news for landlords. The new rules, which came into force on 1 June 2019, are aimed at ending unfair and disproportionate administrative fees that were being charged to tenants by some landlords.

In this article, we explain the limits to which landlords may now charge fees to their tenants and what this means in practice. The rules apply only to most assured shorthold tenancies, licences and student lettings.

Prohibited payments

Essentially, all payments are now banned except those allowed by the 2019 Act. For new tenancies, landlords and letting agents can no longer charge for any activity (unless specifically permitted) or time spent in setting up a new tenancy. For example, they must not charge for references or credit checks, guarantor fees or other administrative costs; nor can they charge for inventory costs, check-out costs or cleaning services at the end of the tenancy.

Permitted payments

The only fees and costs a landlord or letting agent is allowed to charge a tenant under the 2019 Act are ‘permitted payments’. This means that when a tenancy begins, when it ends and during the tenancy, the landlords may only charge tenants the following permitted payments:

No other payments are allowed. Furthermore, lettings fees must not be ‘disguised’, so landlords or agents must not attempt to disguise a prohibited payment as (or as part of) a ‘permitted payment’. For example, they must not exaggerate a ‘permitted’ fee in an attempt to recoup their costs for credit checks, references, etc. As a landlord, you may well be caught out if you attempt to do this!

Are there penalties if landlords wrongly impose a charge?

The 2019 Act was introduced to protect tenants and is being enforced by local authority trading standards departments. If a landlord fails to comply with the new rules, they risk a £5,000 fine for a first offence and up to a maximum of £30,000 for subsequent offences.

Also, if a tenant has made a payment to the landlord on request at the end of the tenancy and that payment is not ‘permitted’, the landlord will not be allowed to validly serving notice on the tenant under section 21 of the Housing Act 1988 to terminate the tenancy – unless and until it has refunded the payment. So if you are a tenant and have made such a prohibited payment without knowing your rights at the time, you can consider how to recover your money from the landlord.

What you should do

Landlords should take specialist advice on the new rules so that they understand what they are now permitted to charge a tenant. They and their agents should particularly reconsider their procedures around taking tenancy deposits, etc and how they pass other charges and costs to their tenants to avoid falling foul of the rules.

They should also consider reviewing how new tenancy agreements with incoming tenants should be drafted so that the fees and charges at the start of the tenancy comply with the new rules.

If you are a tenant and you have received a bill from your landlord at the end of your tenancy, consider checking it with specialist solicitors before making any payment. You will not want to risk paying out more than you are legally required to.

For further information, please contact the commercial property team on 01732 770660 or email enquiries@warners.law. Warners Solicitors has offices in Tonbridge and Sevenoaks, Kent.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.

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