Under the new Tenant Fees Act, damage deposits taken at the start of a tenancy will be capped. There are also new rules around holding deposits. Landlords and letting agents need to take heed of the changes, or it could prove costly.
What do the new laws say?
The Tenant Fees Bill is set to become an Act of Parliament in England on 1 June 2019. When it does, there is a maximum cap on how much landlords and letting agents can take for a damage deposit from tenants.
For properties where the annual rental value is less than £50,000 per year, a deposit must not exceed five weeks’ rent. For properties where the annual rental value is more than £50,000 per year, a deposit must not exceed six weeks’ rent.
This differs from the government’s original proposal. Last year, it was agreed that a deposit cap would be set at six weeks’ rent regardless. However, the government recently tabled an amendment, reducing the deposit cap down to five week’s rent for properties where the annual rent is less than £50,000.
What does the RLA say?
The Residents Landlord Association (RLA) has criticised the government for the change in policy. David Smith, Policy Director at the RLA, said: “In doing a complete about turn on this, it is unfortunately vulnerable and elderly tenants who will suffer…those who will now find it more difficult to secure a home to rent will include those on benefits and those who have a pet as a companion.”
What about holding deposits?
The rules around holding deposits have also been tightened. Under the new laws, landlords and letting agents can only keep one holding deposit for a property at any one time. If a landlord/letting agent has a right to retain a holding deposit, the tenant must be informed of the reason in writing.
If a tenancy is later entered into with the tenant, the deposit must be returned. It must also be refunded if the tenant cannot reasonably be expected to enter into the tenancy – perhaps because the landlord has breached the law.
Breaching the law
If a landlord/letting agent does not adhere to the new laws when they are introduced, local trading standards may issue a £5,000 fine for a first offence and £30,000 for subsequent breaches.
Contact us now
If you want to speak to a solicitor about your rights and responsibilities as a landlord, please contact us at Breens Solicitors.