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The Tenant Fees Act 2019 will soon be binding on all tenancies

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As of 1^st June 2020, the provision of the Tenant Fees Act 2019 becomes binding on all residential tenancies – including the limit on the amount of deposit a letting agent or landlord can take from a tenant.

On the same date last year, the provisions of the Tenant Fees Act 2019 came into force, which heavily restricted the fees that residential landlords can charge tenants in respect of a new tenancy.

What is the Tenant Fees Act 2019?

The Tenant Fees Act 2019, amongst other things:

Capped holding deposits and set timeframes for repayment
Capped security deposits
Made a set list of permitted payments which can be taken during the tenancy
Made a set list of prohibited payments which cannot be charged under the Act in any circumstances

When the Tenant Fees Act 2019 came into force, all new tenancy agreements or renewed tenancies arising on or after 1^st June 2019 were subject to the provisions of the legislation, but that letting agents and landlords could continue charging fees on tenancies which came into effect before 31^st May 2019 until 31^st May 2020.

You can read about the Act in more detail here, including permitted payments and any exceptions.

What will happen when it is binding?

When the transitional period comes to an end, the Tenant Fees Act 2019 will thereafter be binding on all tenancies, even those that commenced before the legislation came into effect.

The Act currently applies to all new Assured Shorthold Tenancies (AST), tenancies of student accommodation and licences to occupy private residential property in England. However, the Act will also apply to all existing ASTs from 1^st June 2020.

Nevertheless, letting agents and landlords won’t need to reduce the deposit below the cap (of not more than 5 weeks’ rent – unless the annual rent is between £50,000 and £100,000, in which case the maximum allowed is 6 weeks’ rent), unless the landlord enters a new fixed term tenancy agreement with their current tenant.

Should a landlord or letting agent seek to impose any charges other than those designated as permitted payments, they could face a civil claim with a penalty of up to £5,000 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 and soon to be legally binding, it is important for landlords to ensure they’re protected. Our experienced Dispute Resolution and Litigation department have a vast amount of experience working with landlords, so if you need advice on the new regulations, do not hesitate to contact us today.