Tenant Fee Ban – It is about time
The Tenant Fee Act 2019 finally came into force on 1st June 2019. What does it mean for tenants and what does it mean for landlords?
You can find our comprehensive summary of this new piece of legislation here
In a nutshell, any fees charged to a tenant will be presumed to be illegal unless they are expressly permitted within the legislation. That is what we call far reaching and clear legislation.
The spirit of this legislation, much like the proposed changes to section 21 evictions, (Read more here about the end of Section 21) is that tenants should be treated more fairly.
We now find ourselves in a situation in which well over 4 million people find themselves as long term tenants but the tenancies are not open-ended. Perhaps it was inevitable that government needs to catch up and provide some degree of certainty to tenants who are not just tenants for a year or two but potentially very long term indeed. Similarly, the Tenant Fee Ban is addressing the inequality in bargaining power in the system and the many onerous fees and charges which are passed on to tenants.
The only payments in connection with a tenancy that a tenant can be asked to make are:
• the rent
• a refundable tenancy deposit capped at no more than five weeks’ rent where your total annual rent is less than £50,000, or six weeks’ rent where your total annual rent is £50,000 or above
• a refundable holding deposit (to reserve a property) capped at no more than one week’s rent
• payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher
• 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.
If the payment a landlord or agent is charging is not on this list it is not lawful, and a landlord or agent should not ask you to pay it.
But, does this new legislation have any teeth?
1. Yes, enforcement. Landlords will get into trouble in the form of fines and even criminal prosecution. Practically speaking, if a landlord requests a prohibited fee in error, then they have 28 days to return it to the tenant. After that, a breach of this legislation would constitute a civil offense and a fine of up to £5000. But, if within 5 years of that initial fine the landlord shows themselves to be a repeat offender then it could constitute a criminal offense with an unlimited fine.
Local Authorities have the power to levy a fine of up to £30,000. Finally, if in a 12 month period a landlord or agent received two such penalties or fines then they may be added to the government list of ‘Rogue Landlords’. To summarise, yes there are real teeth.
2. Work Around - The second reality which many commentators have already mentioned is that rather than charging onerous fees, certain agents or landlords have already just made blanket increases to the rent itself to accommodate the Tenant Fee Ban. Or to put it more cynically, the government has outlawed fees but just as quickly rents are increasing to offset any likely losses.
It is early days and we will need to see how this plays out over the next couple of years.
You can read more about the Tenant Fee Ban here
You can read more about the proposed changes to Section 21 here
You can download the actual Tenant Fee Ban legislation (with updated legal documentation here )