New legislation prohibits landlords and agents from charging excessive fees to current and prospective tenants.
The Tenant Fees Act 2019 (the Act) comes into force on 1 June 2019, having received Royal Assent on the 12th February 2019. The Act aims to implement the Government’s intention to ban certain fees to improve fairness, competition and affordability in the lettings sector, as first announced in the Autumn Statement 2016. It is part of a wider package of measures aimed at ensuring that landlords and agents deliver more good quality and affordable private housing.
From 1st June 2019 landlords and letting agents will be prohibited from charging certain fees to existing and prospective tenants of assured shorthold tenancies and student accommodation in England, except for certain “permitted payments”. The Tenant Fees Act does not cover long leaseholders, social housing or holiday lets.
In particular, the landlords and letting agents can no longer:-
- Seek excessive deposits, this is now limited to 5 weeks rent if the annual rent is under £50,000.00 and 6 weeks rent if annual rent exceeds £50,000.00;
- Charge in excess of £50.00 (or justified reasonable costs) where the landlord, when dealing with a tenant’s request to vary, assign or novate a tenancy agreement;
- Charge a tenant a fee as a “fine” for early termination of a lease where the landlord is unable to show loss; and
- Charge a premium for supplying communication services, such as internet and telephone connections.
If a landlord and/or its agents are found charging prohibited fees the penalties include:
- For a first offence – Fines up to £5,000.00 per offence.
- Subsequent Offences – Fines up to £30,000.00 or a court order banning them from letting properties for a year or criminal prosecution if the same offence is committed within 5 years.
- Tenancies are not binding on the tenant; and
- Until the prohibited fees are returned to the tenant, the landlord will be unable to terminate an assured shorthold tenancy.
If you are a landlord, tenant or letting agent and you require further advice on any of the issues raised in this article, please contact our expert Litigation & Dispute Resolution team on email@example.com or telephone 020 7631 4141.