Tenant fee ban
The tenant fee ban is wide ranging and will effectively bar all landlords and agents from charging tenants these fees unless defined as permitted in the legislation.
From 1st June 2019, landlords and agents will no longer be able to charge a number of fees in England for new tenancies signed on or after that date.
Existing tenancies will not be affected until 1st June 2020, but it will apply to renewals of tenancies, excluding statutory and contractual periodic tenancies that arise after the Tenant Fees Act comes into force.
If a landlord or agent takes a prohibited payment after that date they will have 28 days to return it or be considered in breach of this legislation.
Basically, anything not permitted, that the tenant (or someone acting on their behalf like a guarantor or parent) is required to pay as a condition of the grant, continuance, assignment, termination or renewal’ of an AST or licence agreement.
Here are some examples of banned fees:
- Charging for a guarantor form
- Credit checks
- Cleaning services
- Professional cleaning
- De-fleaing a property due to pets in the property
- Admin charges
- Requirements to have specific insurance providers
- Gardening services
Holding deposits, rent (essentially), deposits and charges for defaulting on the contract are all exempted from this ban, with restrictions.
Landlords can require the tenant to use a specific utility or communications provider, whereas agents cannot stipulate such a requirement.
Landlords can also charge for changing tenants or allowing tenants to vacate the property early. This is subject to restrictions on costs.
- Tenancy deposits limited to 5 weeks
- Holding deposits limited to 1 week’s rent
- Ban on any other payments (except contractual default penalties)
- Fines of £5,000 for first offence (civil)
- Fines of £30,000 for second offence (criminal)
Impact Of Fees
The inability of landlords to charge fees listed above will give rise to landlords increasing rents, therefore increasing market rents throughout England. The savings for tenants on the banned fees will be far outweighed by the rental increases landlords will apply to compensate for the ban. Ultimately the losers will be the tenants…
What are your thoughts and the upcoming tenant fee ban? Please comment below…