Residential landlords should be aware of the new legislation that has been introduced to stop tenants being required to pay their landlords additional fees. The Tenant Fees Act 2019 states that landlords can only require tenants to make payment of the following:
-Rent (which can still be paid in the manner agreed between the parties)
-Tenancy deposit (up to maximum of five week’s rent unless the annual rent exceeds £50,000)
– Holding deposit (up to a maximum of one week’s rent) which must be refundable unless the tenant pulls out of the tenancy
-If the landlord pays bills such as utilities, council tax, TV Licence on behalf of the tenant they are entitled to reimbursement
– A fee for the cost and inconvenience of a late payment of rent or replacement of a lost key is permitted providing this is set out in the tenancy agreement
– Damages for breach of agreement e.g. where damage is caused to the property
– Costs in connection with a tenant’s request for a variation, assignment, or surrender of a tenancy. This is capped at a maximum of £50 unless the landlord can show further reasonable costs were incurred.
No other fees will be permitted. Therefore, it is no longer possible to state that at the outset or on renewal of the tenancy agreement that the tenant will have to pay a sum for the letting agent’s costs as has been common over recent years.
Currently the above restrictions apply to all new tenancies entered from 1 June 2019. However, from 1 June 2020 it will apply to all private assured shorthold tenancies even ones entered prior to June 2019.
This will mean landlords need to check their deposits and if they are holding more than 5 weeks rent they may have to provide a partial return of the deposit on or before 30 May 2020.
If you charge a fee (that does not fall within the permitted fees above) after the relevant date you will not be able to evict your tenant until such time as the unlawful payment has been refunded. Furthermore, if you are found to be in breach you may face a fine of up to £5,000 for a first breach. Then if you are found to be in breach again within 5 years you can be subjected to an unlimited fine.
It is of further note that if you are found to have committed multiple breaches on the same occasion the fine is per breach. As such it is possible that very significant fines could be imposed even on a first time offender as it would be up to £5,000 per breach.
If you are issued with a fine you can appeal the decision through the First Tier Property Tribunal but you only have 28 days from the final notice being served to do so. Therefore you must ensure you act quickly if you feel a fine has been issued in error or the amount of the fine is disproportionate.