New laws come into force on 1st June 2019 which will affect Landlords in the private rental sector in England.
Under the Tenant Fees Act 2019(TFA 2019):
- The type and amount of payments that landlords and letting agents can ask tenants to make will be restricted for most Assured Shorthold Tenancies (except social housing and long leases), student accommodation and licences to occupy (including houses in multiple occupation where rooms are licenced to lodgers).
- The amount a landlord can request for a tenancy deposit is restricted.
- The amount a landlord can request for a holding deposit is restricted and there is a new timetable for repayment.
- Landlords and letting agents cannot insist that tenants enter into a contract with a third party for the provision of services or insurance (with some exceptions).
- In addition, there are some minor changes to (a) the duties of letting agents to provide information under the Consumer Rights Act 2015, and (b) the requirement for letting agents to join a client money protection scheme.
The legislation introduces various sanctions for non-compliance.
The new laws will apply from 1st June to the grant of new tenancies. For existing tenancies, there is a grace period of one year.
Payments permitted under the scheme are set out in Schedule 1 to the Act, and include:
- Rent payments (nb. landlords and letting agents will not be able to increase rent in the first year as a backdoor way to recover payments that would otherwise be prohibited under the new rules)
- Deposit, capped at five weeks’ rent (six weeks if the annual rent is more than £50,000).
- Holding deposit (sometimes paid by the tenant to reserve the tenancy) capped at one week’s rent. This must be handled in accordance with Schedule 2.
- Payments relating to the tenant’s defaults – such as the reasonable cost incurred to replace a lost key or security device or change the locks, interest on rent that has not been paid within 14 days of its due date (capped at an APR of 3% above the Bank of England base rate) or damages for breaching their tenancy.
- Payments to vary, assign or novate the tenancy (capped at £50 or reasonable fees).
- Payments to terminate the tenancy early (capped at the loss suffered by the landlord).
- Certain bills including Council Tax, Utilities, TV licence, phone, internet and cable/satellite.
- Payment towards energy efficiency improvements under a Green Deal plan where required by the tenancy agreement.
If a payment is not expressly permitted, it is prohibited. This means that many fees that are currently charged by landlords and letting agents can no longer be levied including, amongst others, viewing fees, tenancy set up fees, credit check fees and ‘check out’ fees.
The above is a brief overview of the changes introduced by the Tenant Fees Act 2019. If you are a landlord or letting agent concerned about how this legislation will impact you, please contact our property department: call us on Southport 01704 532890, Liverpool 0151 928 6544 or complete a Free Online Enquiry and we will get back to you shortly.