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What do landlords need to know about the tenant fees ban?

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Last Updated: 28/05/2019  
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As discussed individually with many of you, the tenant fee ban is now upon us, and as such, although many of you have already been in touch, we thought it a good idea to send out some information that may help to answer some of your questions.

In conclusion (with the following in mind), the need for referencing your tenant, so to ensure they are the right for you and your property, remains of paramount importance, as does the legal obligation to undertake ‘Right to Rent’ checks. Of equal importance is the need for a professional detailed Check In and Check Out report so to highlight any tenant liabilities. The cost of these now fall fully with the landlord and cannot be charged to the tenant.

At Living in London, we have been in touch with HomeLet (our current chosen referencing provider who also undertake Right to Rent checks) and Key Inventories (our current recommended Inventory Company) so to negotiate the costs of the above on your behalf, which will hopefully help in some way to reduce the costs.

These costs will be discussed with you at an appropriate time and will be dependent on the service agreement you have in place with Living in London.

For landlords who are managing properties directly, and as such dealing with deposits, please do ensure you are fully aware of and comply with all associated changes so to not get caught out.

We hope the following information helps, but please don’t hesitate to get in touch with us if you have any further queries.   

The below information has been provided by Landlord Advice UK. Living in London is not responsible for any misinterpretation of the ‘Tenant Fees Act 2019’ in the following content.

The ‘Tenant Fees Act 2019: Guidance for landlords and agents is available here.

Explained: The ‘Tenant Fees Act 2019’

What fees can I ask a tenant to pay? 


You can no longer require a tenant (or anyone acting on their behalf or guaranteeing their rent) to make certain payments in connection with a tenancy. You cannot require them to enter a contract with a third party or make a loan in connection with a tenancy. The only payments you can charge in connection with a tenancy are as follows:

‘Permitted Payments’
  • Rent.
  • A refundable tenancy deposit capped at no more than five weeks’ rent where the annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or above.
  • A refundable holding deposit (to reserve a property) capped at no more than one week’s rent.
  • Payments to change the tenancy when requested by the tenant, capped at £50, or reasonable costs incurred if higher.
  • Payments associated with early termination of the tenancy, when requested by the tenant.
  • Payments in respect of utilities, communication services, TV licence and council tax.
  • A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement.
When does the ban apply? 

The ban is being introduced in two stages:

From June 1 2019, if you enter into a tenancy agreement, student let or licence to occupy housing in the private rented sector, you will be prohibited from charging any fees or other payments that are not included in the list of permitted payments above.

From June 1 2020, the ban on fees will apply to all applicable tenancies and licences to occupy housing in the private rented sector. You will not be able to charge any fees after this date (apart from those fees which are expressly permitted under the ban as set out above).

Who does the ban apply to? 

The ban applies to all assured shorthold tenancies, tenancies of student accommodation and licences to occupy housing in the private rented sector in England. The majority of tenancies in the private rented sector are assured shorthold tenancies.

Certain licences to occupy are excluded from the Tenant Fees Act 2019, such as those granted under Homeshare arrangements (provided that the necessary conditions apply).

What does this mean for existing tenancy agreements? 

If a tenancy agreement was entered before June 1 2019, you can continue to require a tenant to pay fees written into that agreement (e.g. check-out or renewal fees) until 31 May 2020. After 1 June 2020, the term requiring that payment will no longer be binding.

Should you, in error, ask a tenant to make such a payment, you should return the payment immediately, and must return this within 28 days.

If you do not return the payment within 28 days, you will be treated for the purposes of the Act as having required the tenant to make a prohibited/illegal payment.

You do not need to return any amount of tenancy deposit that is over the cap for tenancy agreements that were entered into before the Tenant Fees Act came into force.

What about damage to property?

The ban does not prevent landlords and agents from recovering damages for breach of contract. A landlord or agent is entitled to recover the costs to put them back in the position they would have been had a tenant carried out all the obligations in their contract (e.g. returning the house in the same condition as which it was found while allowing for fair wear and tear).

Breaching the ban

Each request you make for a prohibited payment is a breach of the Tenant Fees Act.

Where an offence is committed, local authorities may impose a financial penalty of up to £30,000 as an alternative to prosecution.

In such a case, local authorities will have discretion whether to prosecute or impose a financial penalty. Where a financial penalty is imposed this does not amount to a criminal conviction.

A breach of the requirement to repay the holding deposit is a civil offence and will be subject to a financial penalty of up to £5,000.

Will I be added to the database of rogue landlords and property agents if I receive a penalty for breaching the ban? 

If you receive two or more financial penalties within a 12-month period, at a time when you were a landlord or agent, a local housing authority has discretion to include you on the database of rogue landlords and property agents.
 
An offence under the Tenant Fees Act 2019 is a banning order offence under the Housing and Planning Act 2016.

Can I still evict my tenant if I breach the ban?

Where a landlord has taken a prohibited payment, the landlord will not be able to serve a Section 21 notice under the Housing Act 1988 until the prohibited payment is refunded.

If the landlord’s agent has taken a prohibited payment, as long as the landlord has not taken a prohibited payment the landlord can still serve a Section 21 notice.

However, a landlord may still serve a notice under Section 8 of the Housing Act 1988 even where the landlord has failed to refund a prohibited payment.

Despite this, landlords should still refund any prohibited payment before commencing action to recover their property.

Can a tenant receive compensation under the ban? 

A tenant is entitled to be repaid the sum of any unlawfully charged fees, an unlawfully retained holding deposit or amounts paid under a prohibited contract as well as any interest awarded by the enforcement authority.

For more information,  get in contact with us on: 020 7231 0002 or email welcome@living-london.net