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Tenant Fees Act 2019 – What are the changes?

On 1^st June 2019, the provisions of the Tenant Fees Act 2019 came into force, which heavily restrict the fees that residential landlords can charge tenants in respect of a new tenancy. This change comes on top of the recent proposal to fundamentally change Section 21 and bring an end to “no fault” evictions; with the many changes in the present and future for the way landlords, our expert Litigation & Dispute Resolution team are helping provide clarity and give sound legal advice.

To help landlords understand the implications of this new act, we’ve summarised the key changes that the Tenant Fees Act 2019 brings below.

Tenant Fees Act 2019 – What payments can landlords require?

Now, the only payments a landlord (or their letting agent) can require a tenant to pay for a new tenancy (in addition to the rent) are:

A Tenancy Deposit of not more than 5 weeks’ rent (unless the annual rent is more than £50,000.00 – in which case the maximum allowed is 6 weeks’ rent);
A Holding Deposit – where a charge of up to 1 weeks’ rent can be made prior to the commencement of the tenancy, but which must be refunded to the tenant once the tenancy commences. The Holding Deposit must also be refunded should the landlord decide to not proceed to grant a tenancy, or if 14 days have passed from the date of the payment without the tenancy being granted.
Certain defaults of terms of the tenancy by the tenant (such as failure to return a key) however the charges must not exceed the costs actually incurred by the landlord as a result of the breach;
Costs of changes to the tenancy made at the tenant’s request;
Outstanding balance where a tenant wishes to end the tenancy during the fixed term or without giving sufficient notice;
Utilities and/or council tax where the landlord continues to be named as the account holder for utilities supplied to the property, and the charges must not exceed the charges actually made by the supplier.

Effectively, the Act does away with:

Charges for a New Tenancy Agreement
Credit checks
Other administrative checks and work
Deposits of more than 5 weeks’ equivalent rent (unless for very high rents)

Are there exceptions?

There are limited exceptions where the landlord may offer the tenant the opportunity to make a payment instead of complying with a different requirement, but any such requirement must be reasonable – an example may include where a tenant could pay for a credit check rather than providing all of their financial information.

Further, the new rules prevent a landlord from requiring a tenant to make payments to a third party for services such as gardening, insurance or cleaning (including a requirement that the property is cleaned by a professional cleaner prior to the tenants vacating). However, of course, there is no penalty to the landlord should the tenant decide that they wish to employ a gardener or cleaner themselves.

Should a landlord (or their letting agent) seek to impose any charges other than those designated as permitted payments, the landlord could face a civil claim with a penalty of up to £5,000.00 for a first offence, and criminal prosecution with an unlimited fine should further breaches be committed. Further, a landlord will not be entitled to serve a Section 21 Notice (the two-month no-fault notice) seeking possession of the property should they not have complied with the new legislation.

For further information please see the Government guidance.

Expert legal advice for Landlords

With the Tenant Fees Act 2019 now in force, as well as fundamental changes to Section 21 likely on the horizon, it is important for landlords to ensure they’re legally protected. Our experienced Litigation department have a vast amount of experience working with landlords. If you need advice on the new regulations, do not hesitate to contact us today.