On 12 February 2019, the Tenant Fees Bill received Royal Assent and became the Tenant Fees Act 2019 (“the Act”).
The Act will apply to properties in England which are let as assured shorthold tenancies, student tenancies and, in certain circumstances, residential licences. The Act will come into force on 1 June 2019 in relation to new and renewal leases and licences (excluding periodic tenancies). As from 1 June 2020, it will apply to all existing leases and licences. The Act, however, will not apply to social housing.
The main purpose of the Act is to prohibit landlords and letting agents from requiring certain payments to be made. 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.
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. In the alternative, the Enforcing Authority may impose a penalty of up to £30,000.
Further, where monies have been paid in breach of the Act, until such time as those monies are repaid, a landlord will be unable to serve a section 21 notice to terminate the tenancy.
The government intends to publish guidance shortly at which point we shall provide a further update.