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Housing Solicitors

Tenant Fees Act 2019 puts a ban on profit-first mentality (1 June 2019)

Date: 01/06/2019
Duncan Lewis, Housing Solicitors, Tenant Fees Act 2019 puts a ban on profit-first mentality

In February, the Tenant Fees Act 2019 passed Royal Assent and came into force on the 1st June 2019. The purpose of this act is to ensure that residential lettings are adequately affordable by restricting landlords and agents from garnering unreasonable amounts of money through charges additional to rent.

Agents and landlords make large profits from charging their tenants fees such as inventory fees, drafting the tenancy agreement, referencing etc. The Tenant Fees Act 2019 restricts landlords and mostly managing agents from garnering unreasonable amounts of money from those that can scarcely afford a deposit in the first place.

Currently, tenants are struggling to secure private rented properties due to high rents and substantial upfront costs meaning many subsequently fall into rent arrears and become homeless. Landlords are said to be applauding the efforts of the government to evade the embarrassment of letting agencies charging ridiculous fees. However, the concern is that this ban on profit-making may increase the rent.

Now that the act has been enforced, tenancy agreements that are drawn after the date of enforcement will be subject to inspection in relation to the act. Should landlords and managing agents demand money for setting up, renewing, or ending a tenancy, they may be subject to fines in the civil court of approximately £5,000, and up to £30,000 in the criminal courts for a second offence.

This act will then apply to all tenancies after 1 June 2020. Agents do not have to pay back any fees that have been charged to a tenant before 1 June 2019. The only payments the landlord can charge in connection with the tenancy are;

  1. The rent;

  2. A refundable tenancy deposit which will be capped at no more than 5 weeks;

  3. A refundable holding deposit to reserve the property which is capped at one week rent. The holding deposit can be repaid to the tenant, or it can be put towards the rent or tenancy deposit. Additionally, landlords will only be able to hold the holding deposit for 15 days unless another ‘deadline’ date is agreed in writing. After the deadline, the holding deposit must be repaid within 7 days;

  4. Payments to change the tenancy, which is requested by the tenant, can be capped at £50.00 or reasonable costs incurred if higher;

  5. Payments associated with early termination of the tenancy agreement, when requested by the tenant;

  6. Payments in respect of utilities, communication services, TV licenses and council tax i.e.; bills; and

  7. A default payment for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement.

Any other payments are prohibited.

In possession proceedings, a section 21 may be deemed invalid if payments banned under the act have been taken from the tenants.

Landlords employ agents to source tenants and manage the property; there is a contractual agreement between the landlord and agent. It is unreasonable to expect the tenant to bear these additional costs. Landlords will be responsible for the costs associated with setting up, renewing or ending a tenancy (i.e.; referencing, administration, inventory, renewing and check-out fees). Tenants are expected to know what they are being asked to pay for when completing, renewing, variation or novation of a tenancy agreement and whether those charges are unlawful.

It is believed the Tenant Fees Act 2019 will assist those tenants looking to rent private sector accommodation without the worry of saving a significant amount before moving. It also believed that the act will ensure tenants that they are not out of pocket in the event they are unsuccessful with their checks, rendering them homeless.

Author Amrita Bharj works as a caseworker in the Harrow housing department, she specialises in disrepair matters, eviction, harassment injunctions, homelessness matters, possession proceedings and judicial review.

The Harrow housing department is supervised by director Manjinder Kaur Atwal, who has expertise in a wide variety of housing and property law dispute cases such as possession claims, eviction matters, boundary disputes, landlord-tenant disputes, housing disrepair and homelessness matters. She is also experienced in bringing judicial review matters, reviews and appeals relating to local authority housing decisions, and bringing and defending injunctions.

For expert advice on all social housing matters contact:

Amrita on 020 3114 1299, or email her at amritab@duncanlewis.com

Manjinder on 020 3114 1269, or email her at manjindera@duncanlewis.com

Duncan Lewis Housing Solicitors

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