The Tenant Fees Act 2019 (the Act) is due to come into force on 1 June 2019 and applies to tenancies in England only. The changes affect assured shorthold tenancies, student lettings and licences. From 1 June 2020, the changes will apply to all existing lettings.
The purpose of the Act is to make renting fairer and more affordable for tenants by reducing the costs at the outset of the tenancy. It is designed to deal with a perceived imbalance of power and increase transparency and competition in the private rental market.
1. The Act bans landlords and their agents from charging payments in connection with a tenancy for other than rent, default payments for late payment of rent or lost keys, utilities, TV licence and council tax. Payments for assigning or varying a tenancy will be capped at £50. Any other payment is considered to be a prohibited payment.
2. Deposits will be capped at no more than 5 weeks’ rent where the annual rent is less than £50,000, and no more than 6 weeks’ rent where the annual rent is £50,000 or more. Holding deposits to reserve a property will be capped at no more than one weeks’ rent.
3. Holding deposits must be refunded to the tenants within 7 days of the tenancy agreement being completed, however the landlord may retain the holding deposit in the following circumstances:
i. If the tenant provides false or misleading information for a reference check;
ii. If the tenant changes their mind and decides to withdraw but they notify the landlord before the deadline for agreement has passed;
iii. If the tenant fails the right to rent check under the Immigration Act.
4. Breaches will be a civil offence and will result in financial penalties of up to £5,000. If a further breach is committed within 5 years then this will be a criminal offence and the penalty is an unlimited fine. Local authorities may impose a financial penalty of up to £30,000 as an alternative to prosecution. If a landlord receives two or more financial penalties within a 12 month period, their local housing authority has the discretion to include them on the database of rogue landlords.
5. A landlord will be unable to use a s21 notice until they or their agent have repaid any unlawfully charged fees or returned any unlawfully retained holding deposit.