On 12 February 2019, the Tenant Fees Bill received Royal Assent and became the Tenant Fees Act 2019 (“the Act”). The Act came into force on 1 June 2019 in relation to new and renewal leases and licences (excluding periodic tenancies) and introduced protection for most residential tenants in the private rented sector in England. As at 1 June 2020, it applied to all existing leases and licences. The Act, however, does not apply to social housing or long leases.
The main purpose of the Act is to prohibit landlords and letting agents from requiring certain payments to be made from tenants of most assured shorthold tenancies, student accommodation and under licences to occupy. These are payments which are in excess of the rent and which do not relate to items such as:
- utilities, council tax, television licence and communication services;
- the tenancy deposit. In relation to this, the Act does limit the tenancy deposit so that where the annual rent is less than £50,000, the deposit cannot exceed five weeks’ rent. If – – the annual rent is £50,000 or more, the cap will be six weeks’ rent; and
- a “holding deposit”. The Act provides that any “holding deposit” must not exceed one week’s rent and must be fully repaid, save for certain limited circumstances.
The Act will also limit the payment for items such as loss of keys and late payment of rent, variation/assignment/novation of tenancies, etc.
There are payments that landlords and letting agents are prohibited requesting from tenants which include fees relating to tenancy set-up, viewing, credit-check, inventory check, check-out and those for professional cleaning services.
Enforcement of a breach of the Act will be carried out by Trading Standards and District Councils (“the Enforcing Authority”) who may:
- issue an initial fine up to an amount of £5,000;
- where there is a second breach within five years, a criminal offence will have been committed and a fine and banning order may be imposed. The penalty for the banning order offence under the Housing and Planning Act 2016 is an unlimited fine. In the alternative to prosecution, the Enforcing Authority may impose a penalty of up to £30,000.
The Act also makes provisions for tenants, or relevant persons, to recover unlawfully charged fees through the First-tier Tribunal and prevents landlords from recovering possession of their property through the section 21 notice procedure until the landlord has repaid any unlawfully charged fees or unlawfully retained holding deposit.
In case of any action taken to enforce the Act, landlords and tenants are encouraged to keep evidence of any payments they have requested or paid. For example, it is suggested that tenancy/pre-tenancy agreements, other relevant paperwork, receipts and invoices, bank statements, correspondence from tenant/landlord/agent and any notes made at the time or after any conversation with the other are kept.