A landlord or letting agent? Here are fees you can charge your tenants as of 1st June.
22nd May 2019 by A landlord or letting agent? Here are fees you can charge your tenants as of 1st June.
As a landlord or letting agent, the Tenant Fees Act 2019 (TFA) designed to introduce new protections for tenants in the rental market by restricting certain fees to be charged, taking effect on 1st June 2019, may not be favoured by you but make sure you know the detail, or you could be in for paying some hefty fines.
Who do the restrictions apply to?
The restrictions will apply to Assured Shorthold Tenancies (ASTs), student lettings and licences to occupy (with certain exceptions). They will apply to anyone who is considered a “relevant person” under the legislation. This will include tenants, landlords and agents, but will also extend to guarantors and lodgers.
When does the legislation take effect?
The legislation will take effect on 1st June 2019 and apply to all “occupational relationships” entered into on or after that date. For tenancies created before 1st June 2019, landlords and letting agents will have one year in which to update their existing letting agreements. This applies to rolling tenancies as well.
After 1st June 2020, any provisions in the old tenancies that conflict with the TFA will be deemed to no longer apply. Landlords and letting agents must take care – any sums that are taken after 1st June 2020 will be potential cause for sanctions.
What are the restrictions?
Under the new legislation, landlords and letting agents will no longer be able to demand admin payments from tenants. Examples of these are check-out fees, credit check and set-up fees.
Landlords will face further prohibitions on third-party contracts (for example, for cleaning services or insurance) and will not be permitted to make loans to anyone.
From the 1st June, landlords and letting agents will only be able to charge tenants “permitted payments”.
These are:
- Rent
- Council Tax and utilities
- TV license
- Tenancy deposit , which in most cases be capped at five weeks’ rent
- Holding deposit, the maximum of which would be one week’s rent
What are the sanctions?
The sanctions will generally be enforced by the local authority Trading Standards. A breach of the restrictions will occur each time that a landlord or letting agent makes a request for a prohibited payment. This means that it will be very easy for landlords and agents to inadvertently make multiple breaches.
The enforcement authority will have the power to impose a financial penalty of up to £5,000 on the landlord or agent. This is for each breach, which, in the case of multiple breaches, could become very costly, very quickly.
If a landlord or agent commits a further breach of the prohibitions within five years of receiving a financial penalty, this will be viewed as a criminal offence. As an alternative to prosecution, an enforcement agency will have the power to impose fines of up to £30,000.
Other penalties can include a banning order or being added to the database of rogue landlords and property agents. It would also be impossible to properly serve a section 21 notice until any unlawfully demanded fees or unlawfully retained holding deposit have been returned.
Clearly, this will add further complexity to landlord and tenant relationships. As no examples of how the law will be applied yet exist, landlords and agents will have no choice but to adopt a cautious approach.
Laceys Solicitors provides specialist services in landlord and tenant law. If you would like any further advice on your obligations or rights, on disputes or drafting of rental agreements, please contact our landlord and tenant department on 01202 755204 or b.sims@laceyssolicitors.co.uk who will be happy to help.
This article provides information and comments on legal issues and developments of interest. The contents of this article do not constitute legal advice, is not a comprehensive treatment of the subject matter covered, and should not be relied on as such. Legal advice should be sought about your specific circumstances before taking any action with respect to the matters discussed.
Questions relating to this article should be addressed to b.sims@laceyssolicitors.co.uk