Official government guidance for tenant fees ban released

by Property 118

10:27 AM, 2nd April 2019
About 6 months ago

Official government guidance for tenant fees ban released

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Official government guidance for tenant fees ban released

The Ministry of Housing, Communities & Local Government have released their official guidance notes for landlords, letting agents and local authority enforcement officers explaining how the Tenant Fees Act 2019 affects what is now allowed to be charged from the 1st of June.

Click here to view the full guidance document.

You cannot evict a tenant using the section 21 eviction procedure until you have repaid any unlawfully charged fees or returned an unlawfully retained holding deposit. All other rules around the application of the section 21 evictions procedure will continue to apply.

This guidance applies to England only.

“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.

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 payment within 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.”

 



Comments

Ross Tulloch

10:51 AM, 2nd April 2019
About 6 months ago

We issue 12 month contracts with a six month break. We write in the contract that if you leave within 12 months but after six, there is a £200 charge. Presumably this will not be legal? We would have to do a 12 month contract in future to mean a break of contract after six then ok to charge £200?

Marty K

11:01 AM, 2nd April 2019
About 6 months ago

Any clever clogs come up with a cunning plan to recover credit checks fees..?

Ian Narbeth

11:24 AM, 2nd April 2019
About 6 months ago

Reply to the comment left by Marty at 02/04/2019 - 11:01
Not yet, Marty. I am writing a piece on this Act but with Brexit going on nobody in Parliament will be listening so I won't publish it yet. The starting point of the Act is that ALL payments made by a tenant to a landlord are illegal (and the landlord is a criminal for taking them) unless they are expressly authorised by the Act. The Act does say that rent is legal and also (perhaps mindful of a future Corbyn government) that the Secretary of State CANNOT make payment of rent unlawful. Thanks "Conservative" Government. Thanks for nothing.

Landlords will need to be ultra cautious as a minor slip up may lead to a criminal record and allow a tenant to defeat a s21 notice. Furthermore section 6 of the Act imposes a duty on local authorities to enforce the Act.

Marty K

11:40 AM, 2nd April 2019
About 6 months ago

Reply to the comment left by Ian Narbeth at 02/04/2019 - 11:24
Ian N - many thanks for that detailed reply. I'll await the release your treatise on this joyous subject with much anticipation.

I wholeheartedly agree with your sentiment that it is a good thing that rent has NOT been deemed illegal...

I'm now off for a cup of tea and to spend two minutes in silence pondering the future of this 'great' nation.

Luke P

11:43 AM, 2nd April 2019
About 6 months ago

Why are they linking any breaches to section 21. We have proper process for anyone who breaks any rules, not arbitrary 'well *this* is what will happen to you if you don't follow our orders' style justice. What happened to punishment fitting the crime? It's like they tack on an extra thing just because they can. How about if you speed, you go to Court and can be fined/get points, but...we don't feel that's enough so outside of the jurisdiction of the Court, the Police Officer that stops you at the time can immediately crush your car. I don't like the way our laws are developing.

Ian Narbeth

13:00 PM, 2nd April 2019
About 6 months ago

Reply to the comment left by Luke P at 02/04/2019 - 11:43"Why are they linking any breaches to section 21." For the same reason that they link failure to give the gas safety certificate before the tenant takes occupation or to serve the Prescribed Information Form precisely right. Because it b*gg*rs up the landlords. I think there is a Parliamentary draftsman who really has it in for landlords and every piece of legislation is drafted so as to make things more difficult than for landlords than they need be.
The Tenant Fees Act deals with the mischief (used in its legal sense) of landlords (or more usually their agents) charging excessive fees. That could have been dealt with by making such fees unlawful, requiring that they be repaid (possibly with interest or a penalty) within 7 or 14 days of demand and with punishments for not repaying withing that time frame. Even that goes beyond normal business relations: if the gas company over-charge me they don't get fined £5000 if they don't repay when I ask!
Instead the offence is immediate. Demand 1/4% pa interest extra (because you miscalculated Base Rate or forgot it had gone down) and you are immediately in breach and liable to a fine if the tenant pays it. The Guidance tells enforcement authorities: "Generally, we expect the enforcement authority to consider each breach on a case by case basis and for the maximum amount to be reserved for worst offenders." Which means that the maximum penalty may still be imposed for less than worst offences.
For many in the PRS £5000 may represent several months' rent and £30,000 could be two or three years' rent. The Act is a hair trigger gun and the bullets are explosive.

Luke P

14:06 PM, 2nd April 2019
About 6 months ago

Reply to the comment left by Ian Narbeth at 02/04/2019 - 13:00
A far more eloquent version of what I was trying to articulate. Essentially it's not proportionate nor balanced. We don't want anyone to break any laws no matter how small, but we don't automatically and immediately exterminate someone the instant they fail foul of any such laws because that's not proportionate...nor even necessary. It's like we've forgotten how to write legislation and instead it's being drawn from an individual(s) emotion. Slippery slope...

lloydbuilders@hotmail.co.uk

14:09 PM, 2nd April 2019
About 6 months ago

What happens when the tenant, accidentally or otherwise whilst in an AST occupancy, breaks or damages something that requires a repair , replacement or decoration that the tenant would previously be held liable for and that the said tenant would pay the bill?
Are landlords no longer allowed to bill the tenant for costs that they (the tenant) have incurred and the LL has had to rectify, all usually covered in the AST?

Ian Narbeth

14:42 PM, 2nd April 2019
About 6 months ago

Reply to the comment left by at 02/04/2019 - 14:09
The Landlord can still claim damages but he can't charge a fixed sum for a particular breach. You can still claim a deduction from the deposit.

WP

16:54 PM, 2nd April 2019
About 6 months ago

Sooooo, would it be easier now to just set up a new TA with an existing tenant explaining that removing all these (potentially contentious LL issue areas) are better for them as it creates a simpler contract? (and does not allow the LL to forget about these minute areas that could create merry hell if you then go on to try and evict??) .

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