Can I contract that any new tenant provides their own reference?

by Readers Question

10:10 AM, 14th November 2019
About 10 months ago

Can I contract that any new tenant provides their own reference?

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Can I contract that any new tenant provides their own reference?

Looking into the mine field of the consequences of the new tenant fees act. I have several HMO’s with 4 or 5 tenants all on a single joint contract (ie. a shared house scenario).

Generally about once a year, at a point the contract has become periodic, a tenant will want to move out and the others want to stay. At this point I say that’s fine if they want to find another sharer and require the incoming tenant to cover the charge of a reference check. I then draw up a new contract, we all sign, I re-protect the deposit and I make no further charge.

As I understand it, I can no longer charge the incoming tenant for the reference, but could I make it a condition of the contract that when this situation arises, that any new tenant the others want to have join them must provide a current reference from a recognised agent such as the RLA.

Also, is registering the new tenant line up with the deposit protection scheme a reasonable cost as well as drawing up a new contract and liasing with the new tenant.

I’m guessing it’s a big no to all these questions and the only answer is to put the rent up. Thought I’d ask anyway.

Many thanks for all and any replies.

Jamie

Editors Note: Official government guidance for tenant fees ban released

What fees can I ask a tenant to pay?

You cannot 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:

  • The 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; and
  • A default fee for late payment of rent and replacement of a lost key/security device, where required under a tenancy agreement

If the fee you are charging is not on this list, it is a prohibited payment and you should not charge it. A prohibited payment is a payment outlawed under the ban.


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Comments

Nick Pope

16:17 PM, 21st December 2019
About 9 months ago

I had this scenario arise recently where a tenant left and the remaining tenants found another to take over. He seemed OK but as the old references were very good and the remaining 3 could cover the rent easily I simply reminded them that they were jointly and severally liable for the rent so if the new guy did not pay it was their responsibility. A few days later they sent me a credit reference on the new tenant that they had got and paid for - result.

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