The Tenant Fees Act will come into force on 1 June 2019.
The aim of the Act is to reduce the costs that tenants face at the outset, and throughout, a tenancy. Tenants will now be able to see, at a glance, what their chosen property will cost them with no hidden costs.
The tenants cannot be charged for extra services, including independent inventories, so the TDS, ARLA Propertymark and the Association of Independent Inventory Clerks (AIIC) have moved to reassure agents and landlords. Landlords might then have to cover this cost themselves, rather than the charging or splitting costs with tenants. Without this option, some letting agents may choose to take the service in-house to minimise costs.
What fees can the tenant still be charged?
- Rent – (must not charge more at the start of tenancy than the end)
- Tenancy deposit – (capped at five weeks rent where annual rent below £50,000)
- Holding deposit – (capped at one weeks rent)
- Changes to the tenancy agreement – (capped at £50 or reasonable costs)
- Tenant lost keys – (capped at reasonable costs)
- Late rent payment interest – (capped at 3% above base rate)
- Payment of council tax and utilities, television licence – (if included in tenancy agreement)
What fees can the tenant no longer be charged?
Some of the prohibited fees include charging for credit checks, guarantor form, cleaning services, inventories, referencing, professional cleaning, administrative charges, gardening services, changing tenant charges, early termination charges and many more.
Please note – as it stands, a landlord will not be required to amend an existing tenancy agreement once the Bill is enacted, however any clause requiring a prohibited payment will be unenforceable against the tenant. The remainder of the agreement will remain valid. Accordingly, it would be wise for landlords and agents to ensure prohibited payments are excluded from new tenancy agreements to avoid breaching the proposed legislation.
Are there penalties for not complying with the new Act?
Should a prohibited payment be charged to a tenant by a landlord, there are a number of penalties including:
- A fine of up to £5,000 for an initial breach imposed by the Local Authority;
- Where a second breach is committed within 5 years of the imposition of a financial penalty or conviction for a previous breach:
- Criminal proceedings in the form of a banning order or an unlimited fine; alternatively
- The Local Authority may choose to impose a civil fine of up to £30,000.
- Unlawfully charged fees could be recovered by the Tenant, assisted by the Trading Standards Authority;
- Landlords may be prevented by the Trading Standards Authority from recovering possession of their property from the tenant.
For more in detail visit GOV.UK
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