201906.03

Tenant Fees Act 2019 – No more hide and seek!

A new Act has come into force with the aim of creating more transparency on costs for tenants when renting properties, in other words, no more hidden costs. In a nutshell, the key changes are: 

  • Tenant Fees Act 2019 came into force on 1st June 2019
  • Only applies to England (Wales will be treated as a separate jurisdiction)
  • Applies to AST’s and licences (avoids people exploiting the lease/licence distinction) signed after 1st June 2019
  • Landlords and agents must not require certain prohibited payments.
  • Prohibited payments include:
  1. Advance rent beyond a month’s pay- no front-loading!
  2. Deposits – no more than 5 weeks rent where annual rent in the year is less than £50,000 and no more than 6 weeks rent where the annual rent is £50,000 or more
  3. Holding deposits cannot be more than one week’s rent & must be retuned within 7 days of entering into tenancy.
  4. Default fees e.g. interest on late payments is capped at 3% above the Bank of England base rate and fees for lost keys must be reasonable
  • Permitted payments include:
  1. Damages for breach of tenancy
  2. Payments for variation, assignment, notation or termination of tenancy subject to such payments being reasonable losses
  3. Payments for council tax, utilities TV licences and communication services
  4. Can also keep the holding deposit in certain circumstances e.g. if the tenant does not have the right to rent and neither the landlord nor agent could have reasonably expected to know that or if the tenant provides false or misleading information. However, the appropriate notice must be served if holding deposit is to be kept.
  • Sanctions for non-compliance are:
  1. the prohibited payment or arrangement in connection with the tenancy will not be binding
  2. Tenant may apply to the First Tier Tribunal to recover prohibited payments together with interest
  3. Enforcement action can also be taken by trading standards and district councils
  4. Landlord/agent may face a fine of up to £30,000
  5. Serial offenders may be committing an offence which is liable on summary conviction
  6. May be barred from serving a section 21 notice for as long as all or part of the prohibited payment or holding deposit has not been repaid (section 17(3) of the Tenant Fees Act 2019).

Further information can be found on the government website or feel free to approach our resident Property Litigator, Priya Sejpal, who can be contacted by email priya.sejpal@curwens.co.uk

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