The new Tenant Fees Bill is set to be introduced this summer. Here’s a brief run-down of what’s changing, when, and what breaching the news laws could mean for landlords and letting agents.
Until now, landlords and letting agents have been able to charge tenants additional fees for things such as references, credit checks, creating or renewing a tenancy, cleaning, gardening and inventories. Under the new laws, these tenant fees will no longer be allowed.
The Tenant Fees Bill is set to become an Act of Parliament in England on 1 June 2019. To begin with, the laws will only apply to new or renewed tenancies. After one year, the Tenant Fees Act will also apply to pre-existing tenancies. There are different rules for Wales, Scotland and Northern Ireland.
Can any fees be charged?
Landlords and letting agents can still take a deposit from their tenants. This will be capped at 5 weeks’ rent for properties where the annual rent is less than £50,000, and six weeks’ rent where the annual rent is more than £50,000. When a tenant vacates a property, damages can still be sought and deducted from the deposit.
Landlords and letting agents can also charge a tenant for –
- Vacating the property early
- Defaulting on their contract
- Losing their keys
- Paying rent late
- Package contracts which have been agreed between the landlord and tenant – for example, if the landlord pays the broadband and passes the cost on to the tenant
- A change to the tenancy, if it is requested by the tenant
However, there are further rules associated with many of these fees. For example, the cost of replacing lost keys must be deemed reasonable. Tangible evidence, such as receipts, is needed as proof.
Similarly, if a tenant wishes to change the tenancy agreement (perhaps by adding another tenant to the lease) then administration costs must be reasonable. The government has suggested £50 as a guideline. If the charge is greater than this, it must be explained by the landlord or letting agent with written evidence.
Also, if payment of rent is late, landlords/letting agents can only charge 3% above the Bank of England base rate in interest.
What are the consequences of breaking the rules?
If a banned fee is taken from a tenant, he/she is entitled to recover their money with interest from the county court.
In addition, a landlord/letting agent may be fined by local trading standards £5,000 for a first offence and £30,000 for subsequent breaches. Alternatively, a subsequent breach may be treated as a criminal offence.
Furthermore, a landlord or letting agent who is still holding a prohibited payment will not be able to issue a Section 21 notice. This makes the eviction of a tenant all the more difficult.
If you are a landlord and would like help with your legal rights and responsibilities, please contact us at Breens Solicitors.