Stopped, Capped and Permitted Payments

1 June 2019 saw the introduction of a new law to prevent landlords and letting agents charging tenants for a range of admin fees for which they could previously charge and has put a limit on the tenancy deposits to five weeks (or six weeks if the annual rent is £50,000 or more) for new tenancies and renewals of tenancies.

The Tenant Fees Act 2019 is applicable to all agents and landlords throughout England.  As well as capping the amount a tenant can be charged for a holding deposit and security deposit, the Act also  defines what a tenant can be charged in addition to rent.

Certain fees and charges are allowed under the Act but others are defined as prohibited payments.
The main changes to note are

•    Holding deposit amounts have been capped and timeframes have been set for repayment
•    Security deposits have been capped
•    There is now a set list of permitted payments which can be taken during the tenancy
•    There is also a set list of prohibited payments which cannot be charged under any circumstances

The set list of permitted payments includes

•    Rent
•    A refundable holding deposit (up to one week’s rent per property)
•    Tenancy deposit (exclusions apply)
•    Changes to the tenancy (for example, introduction of a pet, permission to run a business from the property or other changes that affect the contractual responsibilities. This is limited to £50 per change unless the landlord is able to prove that the resulting cost was higher and is reasonable)
•    Utilities (electric, gas, water)
•    Council tax, TV licence fees, communication fees (e.g. telephone, broadband etc.)
•    Fee for early termination of tenancy.  In this case the landlord must show reasonable loss has been suffered, for example as a result of referencing, re-advertising and can charge rent until the next tenant moves in
•    Default fees.  These should be written into the tenancy agreement for:
    o    late payment of rent – this can only be after 14 days have passed and interest at a maximum of 3 per cent above base rate
    o    replacing locks/security fobs (reasonable costs only and specific guidance is given on these costs, for example a new standard door key could be valued between £3-£10, a specialist door key between £5-£20 or a replacement key fob up to £50.  There may be circumstances where it is necessary to pay more and ALL claims must be supported by evidence from the landlord of costs and be reasonable

The set list of payments not allowed to be charged by Landlords or Property Agents includes

•    Property viewing
•    Referencing
•    Administration charges
•    Guarantors (this can be a condition of the tenancy but you cannot charge fees for meeting this condition)
•    Inventory checks (both check in and check out)
•    Right to Rent checks (the landlord or agent are liable for this cost, unless the tenant fails the check)
•    Pet fees/deposits
•    Renewal/exit fees
•    Interest on permitted payments
•    Professional end of tenancy cleaning – as a special clause (breach of contract ONLY)
•    Third party fees (unless the tenant chooses to undertake the services themselves)
•    Gardening services (unless included within the rent)

If you would like to read more about The Tenant Fees Act 2019 please click here