The Tenant Fees Act bans most letting fees charged to tenants. It can be confusing to know what you can and can’t charge for when renting a home. Here is a summary of what the Tenant Fees Act means for landlords and tenants.

What is the Tenant Fees Act?

The Tenant Fees Act came into effect on 1st June 2019, abolishing most letting fees and capping deposits paid by renters in England.

As of 1st June 2020, the legislation applies to all tenancies, including those signed before 1st June 2019, when the act first became law.

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Why has it been introduced?

The Tenant Fees Act aims to reduce the costs that tenants need to pay upfront and enable renters to easily see what a property will cost them in rent without any hidden costs.

Before the Tenant Fee Act, tenants were charged letting fees to cover the costs of things like:

  • Taking credit checks
  • Taking references
  • Administrative charges for the rental contract
  • Check-in and check-out charges

Fees for a new tenancy typically averaged around £350, but a small minority of letting agents inflated the costs to increase their profits.

Now, landlords are responsible for paying for these services. Because letting agents compete for landlord’s business, they will only be able to charge the real costs of their services.

What fees can be charged?

Under the Tenant Fees Act, the only payments that landlords and letting agents can charge are:

  • rent, the Tenant Fees Act prohibits charging a higher rent for the first part of the tenancy, so landlords cannot disguise extra fees by charging more for the first months rent
  • a refundable holding deposit (to reserve a property) capped at one week’s rent
  • a refundable tenancy deposit capped at five weeks’ rent (or six weeks’ rent on properties with an annual rent of £50,000 or above)
  • costs of early termination of the tenancy agreement at the request of the tenant, charges can be equivalent to the loss of rent only
  • changes to the tenancy agreement at the request of the tenant, capped at £50 (or reasonably incurred costs, if higher)
  • payments in respect of utilities, communication services, TV licence and Council Tax if the landlord pays these, limited to the cost paid to the supplier
  • replacement of lost keys limited to the actual cost of key cutting
  • interest on late rent payments charged at 3% above the Bank of England base rate

permitted tenant fees

What fees are banned?

Prior to the Tenant Fee Act, tenants may have been charged for the following services. These types of letting fees have been banned.

  • Fees for checking references provided by tenants, for example, contacting their employer or former landlord or checking guarantors references
  • Credit check fees to cover the costs charged by the credit check agencies, Equifax or Experian
  • Fees for undertaking right to rent checks to establish a tenant’s immigration status
  • Fees for drawing up or renewing the contract or issuing a copy of the contract
  • Check-out fees to cover the costs of checking the condition of the property against the inventory
  • Fees or additional deposits if the tenants have pets
  • Mandating professional end of tenancy cleaning in the contract – this can only be deducted from the deposit if the tenant is in breach of contract
  • Additional fees for gardening services (but landlords can include this in the rent)

What happens if I am charged a banned fee?

Landlords and letting agents found in breach of this legislation will incur a fine of up to £5,000. A further violation within five years is considered a criminal offence. The penalties are an unlimited fine and a banning order if found guilty.

If you are charged a banned fee, you should write to your letting agent or landlord. They should either demonstrate why they are permitted to make the charge or refund you if a mistake has been made.

If that doesn’t work you can complain about a letting agent to their ombudsman. All letting agents must belong to a government-approved redress scheme, either The Property Ombudsman (TPO) or The Property Redress Scheme, who will investigate your complaints.

Failing that, local authorities (usually trading standards) are responsible for enforcing the ban so you can report the letting agent or landlord to them. You can find your trading standards office on gov.uk.

As a last resort, you can apply to the First-Tier Tribunal. You will have to pay a fee to use this service and an additional fee if your case requires a hearing. If the ruling is in your favour, your landlord or letting agency will have to repay your legal fees.

 

M&M Property is committed to excellent customer service for our landlords and tenants. Please get in touch if you’d like to hear more about our services for landlords or are looking for property to rent in Islington, Stoke Newington, Highbury, or Newington Green.