Summary of Tenant Fees Act 2019
The Tenant Fees Act 2019 (TFA 2019) came into force on 1 June 2019. This law aims to protect those renting privately and applies mainly to assured shorthold tenancies, student accommodation and licences to occupy.
Under new tenancies granted on or after this date, landlords and letting agents will be permitted to charge:-
- Tenancy deposits (subject to a cap – which is five weeks’ rent for annual rents under £50K and up to six weeks for those with a higher rent)
- Holding deposits to reserve a property (subject to a cap of one week’s rent and it must be refundable). You can only retain a tenant’s holding deposit if they provide false or misleading information which reasonably affects your decision to let the property to them.
- Default fees (for late payment of rent and replacement of keys or security device)
- Changes to tenancy (subject to a cap of £50 or reasonable costs incurred if higher)
- Early termination fee if requested by the tenant
- Council tax, utilities, TV licence, communication services such as landline phone, internet and cable or satellite TV (as actual costs incurred)
will be prohibited from charging (please note this is not a definitive list):-
- Tenancy set-up fees
- Viewing fees
- Credit-check fees
- Inventory check fees
- Check-out fees
- Fees for professional cleaning and gardening services
- Administration charges
- Referencing charges.
Landlords will also be prohibited from requiring tenants to enter into contracts with third parties for the provision of services e.g. reference checks or insurance. However, the tenant may opt to pay for third party services.
Where there are existing tenancies, landlords will be able to continue to charge the prohibited fees to tenants until 31 May 2020 but only if the existing tenancy agreement provides for this. From 1 June 2020 any terms in existing tenancies that are in breach of the TFA 2019 will no longer be enforceable and any payments made in respect of those terms in relation to a period from 1 June 2020 are to be repaid.
The consequences for non-compliance are financial penalties up to £5,000 where there is a breach, a fine up to £30,000 where an offence has been committed i.e. committing a further breach within five years of a financial penalty being issued or criminal prosecution.
Tenants can write to their landlord to recover payments made towards prohibited fees. If repayment is not forthcoming the tenant can take action against the landlord with the relevant enforcement authority this is likely to be the local authority or make a claim to the First-tier Tribunal for repayment of a prohibited payment.
Landlords will be still to be able to claim for damages for breach of contract however they will not be able to serve a section 21 notice under an assured shorthold tenancy if the landlord is in breach and the repayment to the tenant is still outstanding.
Are there ways around it?
Where a tenancy agreement was entered into before 1 June 2019, you will still be able to charge fees until 31 May 2020, but only where these are required under an existing tenancy agreement. After that it will apply to all tenancies.
As the Act is designed to cover any angle of avoiding its rules, it covers all loopholes that were foreseeable. For example, you cannot charge different rents in different months to recover a fee in, say, the first month rent.