What are the main changes brought in by the Act?
For tenants, the main changes relate to the banning or capping of fees. Under the Act, the only payments you will be required to pay are as follows:
- The refundable tenancy deposit (this is capped at no more than five weeks’ rent if the total annual rent is under £50,000, or six weeks’ rent if the total annual rent is £50,000 or more.
- A refundable holding deposit to reserve a property (capped at no more than one week’s rent) – any more than this would be considered a prohibited payment.
- Payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher. Payments in relation to changes to the tenancy may, for example, include a request to switch from a periodic to a fixed-term tenancy.
- Payments associated with early termination of the tenancy, when requested by the tenant
- Payments in respect of utilities, communication services, TV licence and council tax; and
- A ‘default fee’ for late payment of rent and replacement of a lost key/security device giving access to the housing, where required under a tenancy agreement.
It is important to know that as a tenant, if you are being asked to pay any other form of fee to your landlord or their agent, this is prohibited under the Act; this includes charging fees for credit checks and viewing. These are the types of letting agent fees banned by the new Tenancy Act 2019.
So What does this letting agent fees ban mean for tenants?
For tenants in general, this represents positive news as it evens the playing field in terms of the charges paid and will result in considerable savings. Recent analysis suggests that tenants across the country could collectively save in the region of £192m each year, based on approximately 860,000 rental transactions which are recorded annually. Indeed, according to a survey by English Housing in 2017/18, the average tenant was charged £223 in fees alone; and some pay considerably more than this.
The Act relates to the most common tenancy types, including assured shorthold tenancies, student accommodation tenancies, and licences to occupy housing in the private rented sector in England.
What other changes does the Tenancy Act make to Letting Fees for Tenants?
In addition to the above changes, the Act also sets a timetable for dealing with repayment of a holding deposit (typically taken to hold a property while credit checks are being undertaken). Specifically, a holding deposit must now be paid back to the tenant within seven days. The landlord can, however, retain the holding deposit if the tenant has provided false or misleading information, fails the right to rent checks, or they decide to withdraw from the proposed tenancy agreement – or fail to take reasonable steps to enter into the agreement.
The Act also prevents landlords and agents from mandating that tenants seek services such as insurance, gardening, and inventory from third-party companies (the Act does not include essential services such as utilities – the tenant must still pay for these).
What should I do if I am being asked to pay for letting fees which are banned under the Act?
Landlords and letting agents understand the risks and implications of not complying with the Act; they may face a fine of £5,000 for a breach, and if found guilty of a second breach, may be fined up to £30,000. And more significantly, this second breach may also be classified as a ‘banning order offence’, meaning the First-tier Tribunal may ban them from being a landlord or acting as a letting agent in England.
If you have reason to believe your landlord or their agent is charging fees which are outside those permitted by the Act, speak to the trading standards department of your local authority who have a legal duty to enforce the new law. You can also seek legal advice from a specialist property Solicitor.
Unlawfully charged fees may also be recovered by applying directly to the First-Tier Tribunal.
If you are facing a possible section 21 eviction notice, it should be noted that under this new Act, your landlord or the letting agent will be unable to issue this until they have repaid any prohibited fees which you are owed.
Final words on letting fees for tenants
In 2018, it was revealed that the proportion of UK renters has doubled in 20 years. As such, the Tenancy Fees Act 2019 brings peace of mind for the millions of families reliant on landlords to place a roof over their heads, that they will not face unexpected, unfair, and disproportionate fees. Our landlord solicitors and tenant solicitors will be able to help if you're concerned about these new changes.
Guillaumes LLP is a Weybridge law firm offering a full range of services. If you're in need of our commercial property lawyers, residential property lawyers or find yourself in the midst of a dispute, our property dispute solicitors can help. Discuss your requirements with us today.