Fees Ban for students starting September?

Fees Ban for students starting September?

8:43 AM, 23rd April 2019, About 3 years ago 7

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One letting agency I know of is is charging students huge admin fees even though they don’t start their tenancies until September on the basis that they have to pay it now prior to the ban coming into force?

Therefore, the question is if the fees ban is in force for all tenancies that start after June 1 2019 is the admin fee paid before this date as above still allowed?

Many thanks.

Val

Editors Note:

Tenant Fees Act 2019: Guidance for landlords and agents >> Click Here

When does the ban apply?

It depends on when a tenancy agreement was entered into. The ban is being introduced in two stages.

1. From 1 June 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.Landlords will be responsible for the costs associated with setting up, renewing or ending a tenancy (i. e. referencing, administration, inventory, renewal and check-out fees). Agents and landlords do not have to pay back any fees that have been charged to a tenant before 1 June 2019. Where a tenancy agreement was entered into before 1 June 2019, you will still be able to charge fees until 31 May 2020, but only where these are required under an existing tenancy agreement. This might include, for example, fees to renew a fixed-term agreement where a tenant had already agreed to pay these. However, you should consider whether it is necessary to charge in such instances. Where fees are charged, businesses such as letting agents are prohibited from setting unfair terms or fees under existing consumer protection legislation.

2. From1 June 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 – see above).

What does this mean for existing tenancy agreements?

If a tenancy agreement was entered before 1 June 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 paymentwithin 28 days, you will be treated for the purposes of the Act as having required the tenant to make a prohibited payment (a payment that is outlawed under the ban).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. For more information on this, please read the Tenancy Deposit section.



Comments

by Neil Patterson

9:36 AM, 23rd April 2019, About 3 years ago

Good Question. I have added the government guidance notes above, but I am not sure it is clear and I suppose depends on when the tenancy is 'entered into'.

by Ian Narbeth

10:18 AM, 23rd April 2019, About 3 years ago

A tenancy can be entered into today to commence in September 2019. Both landlord and tenant will be bound.
Agents need to be careful though. Unless they complete and date the tenancy before June 1st they will get caught by the Tenant Fees Act. Landlords are often reluctant to complete a new tenancy commencing on a future date because until the current tenants leave they cannot give exclusive possession and quiet enjoyment to the new tenants and are liable to be sued if the current tenants stay on. I suspect there will some "cheating" going on with tenancy agreements being signed by the tenants and held by the agents who all of a sudden on September 1st give the tenants a tenancy dated 30th May! I can't prove it but have seen enough of agents dealing with student houses to know this is likely.
If the tenants can prove the tenancy was not in fact dated until after 1st June, albeit it bears an earlier date, they will be able to recover the fees.

by SimonR

11:48 AM, 23rd April 2019, About 3 years ago

My take on it is if the tenancy starts post 1st June then the fees are not payable, signing the tenancy agreement prior to the actual move in date doesn't create the tenancy it creates a binding agreement, the tenancy will only be created and started once the tenants have been given exclusive access to the property i.e. keys handed over on the agreed date.
Any agent taking fees for a tenancy start date in September will be liable to pay those fees back.

by Ian Narbeth

13:38 PM, 23rd April 2019, About 3 years ago

Sorry, SimonR, but I think you are wrong.

Section 30 of the Act refers to "a tenancy agreement entered into". It is quite possible to enter into a tenancy agreement now for a "term" to start in six months' time. There is a binding agreement. Neither party can withdraw without the agreement of the other. If the landlord does not give vacant possession on the term commencement date the tenant can sue "under the agreement" for damages. If the tenant does not pay rent on the due date the landlord sues "under the agreement". Handing over the keys and the tenant being allowed access is not the test.

Landlords and agents should note that the transitional provisions only run until 1 June 2020 so if the agreement provides for inventory and checkout fees or other set fees, it will be unlawful to accept such payments from 1 June 2020 onwards even for agreements entered into before 1 June 2019.

by SimonR

11:24 AM, 24th April 2019, About 3 years ago

Reply to the comment left by Ian Narbeth at 23/04/2019 - 13:38
"Section 30 of the Act refers to "a tenancy agreement entered into" I fully understand that but you haven't entered in to a tenancy agreement by signing early you have merely entered in to a binding contract. The tenancy would only start on the agreed date and once keys have been handed over.

Could this possibly be something that ends up in court for clarification and end up costing a landlord/agent a ton of money.

by Ian Narbeth

11:46 AM, 24th April 2019, About 3 years ago

Reply to the comment left by SimonR at 24/04/2019 - 11:24
SimonR, a tenancy agreement commencing in future is what is called a reversionary lease. (The expression primarily relates to a lease which commences when an existing lease ends but also to any lease with a term commencing in future).

The term cannot commence more than 21 years later - see s149(3) Law of Property Act 1925. However it is a lease and not just an agreement to lease. The tenancy has started but the tenant is not entitled to possession until a future date.

by SimonR

16:34 PM, 24th April 2019, About 3 years ago

Reply to the comment left by Ian Narbeth at 24/04/2019 - 11:46
Thanks for the clarification Ian


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