Last year, legislation was introduced banning tenant fees. As Anna Pettinger explains, landlords need to be aware it has now been extended to existing tenancies…
My tenants of two years want me to renew their contract. Can I charge them a fee to cover the work involved?
At the beginning of this month, the Tenant Fees Act (2019) came into full force, encompassing existing tenancies as well as new ones.
Its main purpose is to restrict the kind of payments tenants can be charged by landlords and agents and prohibit certain arrangements in connection with letting a house in England. It also sets out stringent regulations regarding the treatment of holding deposits, for example, money paid to reserve a property, prior to signing the tenancy agreement.
The act is a response to an outcry by tenants who were being subjected to high fees, with very little justification. When it was introduced a year ago, it only applied to new tenancies, but now covers all of them, no matter when they started. As such, you cannot charge any fees for the renewal of your existing agreement.
What fees are banned by the act?
The new regulations protect assured shorthold tenants, student lettings and lodgers living with a private landlord. You cannot charge for:
- Viewing a property
- Reference or credit checks
- Insurance policies
- Guarantor requests
- Administration costs
- Tenancy renewal fees
- Professional cleaning, unless there is good reason and evidence to support your claim
- Gardening services
If you ignore the rules and ask a tenant to pay for something that is banned, you will not be able to serve a valid Section 21 notice, until you have returned the money.
What impact does the act have on deposits?
There is now a limit on the amount of deposit you can take. Assuming the rent is less than £50,000 a year, you are only entitled to ask for the equivalent or less than five weeks’ rent.
Is there anything I can still ask my tenants to pay for?
Yes, you are still entitled to charge tenants for the following:
- Late payment of rent, if this is specified in your agreement. (The rent must be 14 days late or more and your charges cannot exceed 3% APR above the Bank of England base rate.)
- A reasonable replacement fee for lost keys or fobs, if this is included in your tenancy
- Early exit from the tenancy or leaving without notice
- Changing the term or transferring the tenancy to someone else
Should you wish to enforce any of these charges, I would recommend ensuring your agreement is compliant and advising your tenants that some of the terms (if any) relating to banned payments are no longer valid. This is especially important if you are considering possession proceedings.
What happens if I don’t comply?
If you fail to comply, there are significant penalties, ranging from civil fines of up to £5,000, to large fines of up to £30,000, criminal prosecution and banning orders. A simple mistake or relatively minor breach, therefore, can have serious consequences.
If you are concerned any payments you have taken recently could be in breach of the new act and you are wanting to serve a Section 21 notice, don’t hesitate to email me: anna.pettinger@tayloremmet.co.uk or call 0114 218 4000
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