The Tenant Fees Act 2019 came into force on 1 June 2019 in relation to fees that can be charged to tenants by their Landlords and Agents in England. The Act is aimed at the private residential renting sector in England. The aim of the Act is to ban unfair letting fees. Communities Secretary Rt Hon James Brokenshire MP said that “This is part of our ongoing action to make renting fairer and more transparent and make a housing market that works for everyone.” The changes are expected to save tenants across England at least £240 million a year – which could be a major blow for many landlords in the private rented sector who often operate on tight margins.
What is a Tenancy?
A tenancy (for the purposes of the Act) is defined as:
- Assured shorthold tenancies
- Licences (e.g. lodger lettings)
- Student lettings (provided by a specified educational institution).
The definition does not cover certain licences to occupy, such as Homeshare arrangements and the Act does not apply to local authorities.
What fees can still be charged?
All letting fees are now prohibited unless they fall into one of the permitted categories. These are summarised in the Government’s guidance to the Act which you can access here but generally only the following payments are still permitted:
- Refundable tenancy deposit (capped at 5 weeks’ rent for properties with an annual rent of £50,000 or less and 6 weeks’ rent for those over £50,000)
- Refundable holding deposit (capped at one week’s rent)
- Payment for a change to the tenancy that is requested by the tenant (capped at £50)
- Payments for agreeing to end the tenant’s tenancy early (but only if reasonable)
- Late payment fee or key/door entry replacement (subject to reasonableness and limits on interest charges).
What are the implications
If a Landlord or Agent breaches the Act, they commit a civil offence and can be fined up to £5000 for each individual breach. If a further breach is committed within 5 years of the initial fine, then this will be a criminal offence and could result in the imposition of a financial penalty of up to £30,000 and result in an application being made for a banning order under the Housing and Planning Act 2016. A banning order bans a landlord in England from letting housing, engaging in letting agency work or engaging in property management work for the period of time specified in the order. Breach of a banning order is a criminal offence.
Each enforcement authority is expected to develop its own policy on when to prosecute if a criminal offence has been committed under the Act and when to issue a financial penalty as an alternative.
If you receive two or more penalties within a 12 month period or are convicted of a criminal offence under the Act then the housing authority has the discretion to add you to the database of rogue landlords and agents.
The Tenant must be repaid all unlawfully charged fees and deposits and the enforcement authority may award interest on top.
The above provisions will apply immediately to all new tenancy agreements entered into from 1 June 2019.
Where the tenancy agreement was entered into before 1 June 2019, fees can still be charged until 31 May 2020 if the existing tenancy agreement provided for their payment. However, from 1 June 2020 the ban on fees will apply to all applicable existing tenancies in the private rented sector and any term in an existing lease requiring payment after this date will no longer be binding.