Official government guidance for tenant fees ban released

by Property 118

10:27 AM, 2nd April 2019
About A year 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

Ian Narbeth

17:23 PM, 2nd April 2019
About A year ago

Reply to the comment left by Jennifer Wallis at 02/04/2019 - 16:54
Jennifer, you don't need to amend your agreements yet. The Act will apply to tenancies entered into after 1 June 2019 and to all tenancies after 1 June 2020. It will be good practice to update your standard AST.

WP

17:28 PM, 2nd April 2019
About A year ago

Reply to the comment left by Ian Narbeth at 02/04/2019 - 17:23
Thanks Ian. I have come to inherit (father's rental properties he has retired from running them) so I am thinking it might be best to start from fresh anyway so I can be listed as the direct landlord in case of any Sect 8/21's that need issuing etc. Also gives me a chance to update all the contracts, delete the info about fees (where they are inserted) and just make it clear to one an all that my father is stepping down and that I am the LL now. Some of the Contracts are set up by the Managing Agent my father used (which we not longer employ) so again if their details are removed it just bodes better for clarity?

David Price

18:03 PM, 2nd April 2019
About A year ago

I am contemplating how much to increase my rent to allow for the loss of tenant fees. Any ideas?

Monty Bodkin

20:59 PM, 2nd April 2019
About A year ago

Reply to the comment left by David Price at 02/04/2019 - 18:03
Hello David,

A tenner -in 4 years time. Working shown below.

Rents increase with glacial slowness.

Take your pick which landlord attack will be felt when.

E.g
Scrapping 10% wear and tear allowance in 2015 is only just filtering through now for quality properties. Have a look on Rightmove for a quality furnished let outside of cities. Good luck.

Section 24 will take years and years for the effect to be felt. But it will come.

Me and you are knocking on a bit, but I think we can look forward to consistently compounding rent increases of 2, 3 & 4% every year (which will see us out!)

Working as follows:
Big chain letting agents charge pisstaking fees of about £480. Average tenancy about 48 months. Loads & loads of variables!
But my best guess is this particular attack will equate to another ten quid a month in 4 years time. Happy days for portfolio landlords currently only charging reasonable fees.

Michael Barnes

13:17 PM, 3rd April 2019
About A year ago

Reply to the comment left by Luke P at 02/04/2019 - 11:43
"Why are they linking any breaches to section 21."

To (try to) stop criminal landlords unlawfully taking tenant's money and then kicking them out.

But we all know they just send the boys round anyway, and don't bother with the formalities of legal evictions.

Ian Narbeth

14:21 PM, 3rd April 2019
About A year ago

Reply to the comment left by Michael Barnes at 03/04/2019 - 13:17Sorry but that is not a good answer. If under the new regime a landlord wrongly charges a tenant say a £20 fee for sending out a late payment letter or charges 4% over Base Rate for late rent instead of 3% over, the court would have ample power to deal with it when the s21 application reaches court, e.g. by offsetting it against what the tenant owes or requiring the LL to pay it back.
The new Act allows a tenant to ambush the landlord. "You owe me £20. Go back to square one and start again with your s21 application. Pay another court fee and try again. In the meantime, if I don't pay the rent you can wait 2 months before starting a s8 claim and paying a separate court fee. Oh, and by the way, I'll ask the local authority to bring a claim against you for over-charging that £20. You might be fined £5000 (or £30,000 if you have slipped up with your numbers in the past 5 years). Feeling lucky with your s21, punk!"
In what other area of life is this behaviour encouraged by the law? In what other area are trivial matters allowed to prejudice a creditor like this? Interesting to note that social housing providers are not subject to this.

Luke P

14:24 PM, 3rd April 2019
About A year ago

Reply to the comment left by Michael Barnes at 03/04/2019 - 13:17
Continuing my analogy, Michael...we don't want people speeding, but do we crush their cars (as well as fining them and adding points to their licence) just because they went 1mph over the limit? You do it; we all do it, although there'd be a lot of tears if that's how we carried on!

Possession Friend

8:40 AM, 5th April 2019
About A year ago

Reply to the comment left by Jennifer Wallis at 02/04/2019 - 17:28
Jennifer, I take it you've served a Section 48 Notice advising tenants - change of Landlord name & address. ? ( in case it helps )

WP

8:49 AM, 5th April 2019
About A year ago

Thanks Chris! Yes all the new info regarding my 'takeover' as the LL was done for all properties at the time. I have already gone to court with her under a Section 8 and this is in progress but I have waived the possession bit in lieu of the Council paying up all the arrears to date. (over 5k in total) The defendants representative now in discussion with the Council and DWP to determine if all her rent can be paid going forward so arrears do not become and issue again.

bob the builder

10:52 AM, 6th April 2019
About A year ago

I use the fee I charge to pay for cleaning & painting of the property before move in, I have stopped doing that now at viewings now state that it will be down to the Tenants when they move in (funny my life is now easier!) - there are no free lunches & if you offered one you are being setup for a big hit...

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