Welcome relief for tenants as the Tenant Fees Act is signed into law
In a move likely to impact anyone involved in the private rental sector, Parliament has enacted a bill known as the Tenant Fees Act 2019 which marks the end of the majority of upfront fees charged by landlords and letting agents in England.
What is the Tenant Fees Act 2019?
In a press release, Parliament has stated that the Act has the following aims:
- To make renting fairer and more affordable for tenants by reducing the costs at the outset of a tenancy;
- To improve transparency and competition in the private rental market;
- To ban letting fees paid by tenants in England; and
- To improve fairness, competition and affordability in the lettings sector.
The Act received Royal Assent on 12 February 2019 and will come into effect on 1 June 2019.
What will change?
The Act bans all payments requested by any landlord excepted those set out in Schedule 1 of the Act which is entitled "Permitted Payments". The Permitted Payments all carry caveats which include:
- A cap on the amount a landlord can take as a security deposit to a maximum of 5 weeks’ rent (if the annual rent is less than £50,000) and 1 week’s rent for holding deposits;
- A cap on the amount that can be charged for a change to a tenancy at £50 unless the landlord can demonstrate that greater costs were incurred;
- A ban on 'default' fees when a tenant has lost their keys or has made a late payment of rent, unless the tenancy agreement provides for this;
- A ban on the charging of fines for early termination of a lease if the landlord cannot demonstrate loss;
- A ban on charging more for supplying standard communication service connections e.g. internet or landline telephone connections; and
- An amendment to the Consumer Rights Act 2015 to specify that transparency requirements should apply to online property portals such as Rightmove and Zoopla.
The above changes apply to tenants and prospective tenants of assured shorthold tenancies (excluding social housing and long leases) and student accommodation in England. It also applies to residential licences (with limited exceptions).
What are the consequences for landlords and agents?
Enforcement of the above provisions will be by local trading standards authorities (TSAs) and district councils, to the extent that they have the resources to do this. If a landlord or agent is found to have breached any of the new provisions, the Act allows for financial penalties of up to £30,000 and potential criminal liability where the landlord has been fined or convicted of the same offence within the last 5 years. Provision is also made for tenants to be able to recover unlawfully charged fees via the First-tier Tribunal.
Finally, under the Act, landlords will be unable to serve a valid notice under S.21 Housing Act 1988 and begin the process of recovering their property until they have repaid any unlawfully charged fees.