The Tenant Fees Act 2019 was passed on 12 February 2019 as part of a government drive to increase protection for tenants in the private rented sector. The Act limits the ability of landlords and letting agents to ask for large deposits and to charge fees to tenants and prospective tenants of assured shorthold tenancies and student accommodation in England.
Although the Act does not apply to social housing and long leases, it does apply to residential licences.
When does it come into effect?
The Act will come into force on 1 June 2019 for new and renewal leases and licences (excluding periodic tenancies) and on 1 June 2020 for all existing leases and licences.
What about deposits?
If the annual rent is less than £50,000, the deposit cannot exceed five weeks’ rent.
If the annual rent is £50,000 or more, the cap will be six weeks’ rent.
Deposits to hold a property before a tenancy is signed must not exceed one week’s rent and must (except in limited circumstances) be fully repaid.
What about other charges?
Other permitted charges are limited to payments for loss of keys, late payment of rent, for assigning or varying tenancies, early termination by the tenant, and for liabilities such council tax, utilities and TV licences.
What if the tenancy agreement allows other charges?
Terms which breach these provisions will not bind the tenant.
Penalties
A landlord or agent can be fined up to £5,000 for breaching the Act. If a second breach is committed within five years, that can amount to a criminal offence being committed and a fine and banning order may be imposed. Alternatively, there can be civil penalty of up to £30,000.
Tenants will also be able to recover money wrongly paid, and landlords will be unable to serve section 21 notices to terminate tenancies whilst holding prohibited payments.
The Act will be enforced by district councils and Trading Standards.
What next?
The government will be publishing more guidance shortly, but landlords and agents should start reviewing their agreements and practices ahead of 1 June.
Richard Bagwell is a partner in our disputes resolution team who specialises in property. If you would like to discuss the issues raised in this article or any other property disputes matter, please do get in touch by telephone 01392 210700 or email drx@stephens-scown.co.uk