On 1 June 2019 the Tenant Fees Act 2019 came into force banning letting fees in England. Tenancy renewals, reference and administration fees will be prohibited under this law and are now to be covered by the Landlord on all tenancies created on or after 1 June 2019 in the private rented sector.
The Act also prohibits any need for the tenant to enter into a contract with a third party for the provision of services (with the exception of utilities or communication services), for insurance or to make a loan to any person in connection with the tenancy.
The aim of the Government is to make a fairer market place and prevent unfair practices of landlords and letting agents.
Any payment made by the tenant must be a “permitted payment” contained within Schedule 1 of the Tenant Fees Act 2019. The following payments are permitted under the TFA 2019:
- A refundable tenancy deposit or holding deposit;
- Payments to change a tenancy;
- Payments associated with early termination of a tenancy;
- Payments in respect of utilities, communication services, TV licence and council tax;
- Default fees.
Any payments required by the landlord, letting agent or licensor, other than those listed above, will constitute a prohibited payment under the TFA 2019, and include:
- Viewing fees;
- Fees for professional cleaning;
- Credit check fees;
- Tenancy set up fees;
- Requiring payments to third parties, the entering into a contract of insurance or the provision of a service from a third party;
- Requiring the making of a loan to a person in connection with the tenancy agreement.
The Act also introduces a cap for tenancy deposits. If the annual rent is less than £50,000.00, only 5 weeks rent can be collected and where the annual rent is over £50,000.00, only 6 weeks rent can be collected.
A reminder that Assured Shorthold Tenancies include those rents that are less than £100,000 per annum and are to an individual and also includes student tenancies, licences but not long leases.
Essentially, this means payments such as credit checking fees, inventory fees and professional cleaning services are now not permitted to be re-charged to the tenant.
Trading Standards will enforce the Act together with local councils and the sanctions for non-compliance is a fine of up to £5,000.00 and criminal sanctions may be imposed. Landlords will also be prohibited from serving a valid section 21 notice under the Housing Act 1988 to obtain vacant possession of a property whilst there are breaches of the Tenant Fees Act 2019.
All residential landlords must make sure precedents are up to date and compliant with the new letting laws.