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20 March 2019

King West

The Tenant Fees Act 2019

The Tenant Fees Act will come into force on the 1st June 2019 having received Royal Assent on the 12th February 2019. The Act was brought forward to deliver upon the Government’s manifesto to improve fairness, transparency and affordability in the residential lettings sector. 

Landlord and agent fees paid by tenants will be banned on the 1st June 2019 and will apply to both Assured Shorthold Tenancies and licences to occupy. Social housing, holiday lets and long leaseholds are not, as yet, covered in the Act.  

Initially, the ban will apply to tenancy renewals, statutory periodic tenancies and new tenancies. Contractual periodic tenancies and pre-existing tenancies will not be affected initially. Instead, pre-existing tenancies will have until June 2020 to run, ahead of also requiring compliance to the Act. Any fees charged to tenants after the 1st June 2019 must comply with the Act, or they may make notices such as section 21 notices for Assured Shorthold Tenancies, invalid. 

There are numerous charges that landlords will be prohibited from charging. These include any payments requested from the landlord for third-party services, such as payment as a condition of the grant, as a renewal or for a continuation of the tenancy. Payments for a reference or inventory service will also be banned. It is sanctioned by the Government that the landlord is far better placed to negotiate and pay these fees and that they cannot recharge the costs to the tenant. 

There are some payments, however, which are permitted. These include a refundable holding deposit to ‘reserve’ a property, to a maximum of one weeks’ rent; a refundable tenancy deposit of no more than five weeks’ rent; the rent itself- although the rent cannot be increased by way of gaining the amounts now at the cost of the landlord; tenant default payments for items such as lost keys or late rental payments; and a change to the tenancy agreement if requested by the tenant. This final charge must be less than or equal to £50. 

In addition to the changes to disbursements and charges, the Act also requires that all letting agents, including those engaging in letting activities online through property portals, must be regulated, abide by the industry code, demonstrate compliance with legislation and satisfy minimum training requirements. 

Enforcement of the Act will be through local Trading Standards offices of local councils. Prosecution for non-compliance will draw fines of up to £5,000 per offence for the first offence and of up to £30,000 for subsequent offences. In addition, courts may ban landlords from letting properties for a year or seek criminal prosecution if an offence is committed again within a 5-year period. 

As the cost to tenants for moving home will be reduced, it is expected that the Act will invigorate the rental market. As such, landlords are advised to review their present situation and ensure that tenants are happy and settled in their rental property. If you require any advice or support with the Act or other letting related issues, in the first instance, please contact James Douglas: jdouglas@kingwest.co.uk or by telephoning the Market Harborough office on 01858 435 970

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