Tenant Fees Ban – Examples

by Property118.com News Team

10:58 AM, 22nd January 2019
About 2 years ago

Tenant Fees Ban – Examples

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Tenant Fees Ban – Examples

Our article “Ban on Lettings Fees to commence June 1st” (click here) created a great deal of discussion in the comments section and in-depth detail on what will and won’t be allowed and is worth catching up on along with the examples below.

Further examples of fees banned, but not exhaustive include:

  • Referencing cost
  • Charging for credit check
  • Charging for completing Guarantor forms
  • Inventory Charges
  • Any Admin fees
  • Additional deposit charges for pets or conditional services relating to keeping pets
  • Any professional cleaning services
  • Gardening services
  • No higher initial rents for a temporary period are allowed to recover costs.

It also cannot be made a condition to take a third party service such as a specific insurance product or Deposit replacement Scheme. Tenants must be given a choice or the tenancy could become invalid.

A Landlord and Agent are in breach of the fees ban if a charge is made and kept for any fee that is not exempt. Trading Standards can issue a fine of up to £30,000 for a breach and a Section 21 notice will be unable to be served on the tenant.

Fees exempt from the ban include:

  • Deposit – up to a maximum of 5 weeks rent if the annual rent is less than £50,000 or 6 weeks if greater.
  • Holding deposits up to a maximum of one weeks rent
  • Rent
  • Fee for a change or early termination of a tenancy when requested by the tenant (subject to cost restrictions)
  • Utilities, communication services and Council Tax
  • Payments arising from Default fees limited to charges for replacement keys or a respective security device, and late rent payments only. It is not considered reasonable for landlords or agents to charge for their time under a default fee. In exceptional cases, it may be appropriate, but the onus will be on the landlord or agent to demonstrate that they have incurred business costs as a result of the default.

 


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Comments

Simon Williams

10:41 AM, 24th January 2019
About 2 years ago

CLEANING. For those still confused, the answer (according to the RLA) is that you CAN still charge for cleaning at the end of a tenancy by way of a deposit deduction, but ONLY if the tenant has clearly been in breach of their contractual obligations and failed to clean to an adequate standard.

The distinction is between a fee which is incurred come what may (not allowed) and a cost incurred because the tenant has been in breach (allowed).

So, if you have a blanket clause in the contract saying that the tenant shall pay to the landlord on termination of the tenancy, a reasonable fee for professional cleaning or shall produce evidence to the landlord that the tenant commissioned a professional clean, that is NOT allowed. That is because even if the tenant does a super job cleaning themselves and therefore commits no breach of the contract, they still have to pay. That is a fee payable come-what-may and is not allowed.

On the other hand, any clause that states something like: "The tenant shall have a duty to clean the Premises to a reasonable standard on termination of occupation and in default of such duty shall be liable to such reasonable cleaning fees as are required to address the breach" is OK. In that case, the tenant only pays if they default. It's therefore not a fee.

Kate Mellor

12:07 PM, 24th January 2019
About 2 years ago

Can you recharge a tenant your referencing costs in the event that they fail the check due to non-disclosures or dishonesty on their application forms? They wouldn’t then be a tenant and it wouldn’t be a blanket fee. E.G. charge a holding deposit to all applicants, fully refundable on passing credit check. I suspect not, but it would discourage those trying it on, or applying for multiple properties as they don’t have anything to lose.

Michael Barnes

22:54 PM, 24th January 2019
About 2 years ago

Reply to the comment left by Kate Mellor at 24/01/2019 - 12:07
I believe that you cannot charge if the fail a reference check, unless you asked them before taking the deposit about their circumstances and the reference check determines that they lied in a material way (e.g they say no CCJs but referencing finds one; they say £x income but referencing finds it is significantly less).

Mandy Thomson

8:41 AM, 26th January 2019
About 2 years ago

Reply to the comment left by Annie Landlord at 23/01/2019 - 10:01Hi Annie
After the first year, a fee clause in a tenancy agreement that contravenes and pre-dates the fees ban will simply become unenforceable - there is no need to vary the agreement. However, in the case you mention, that fee will at least be partly exempt, as per the last bullet point which reads:
"Payments arising from Default fees limited to charges for replacement keys or a respective security device, and late rent payments only. It is not considered reasonable for landlords or agents to charge for their time under a default fee. In exceptional cases, it may be appropriate, but the onus will be on the landlord or agent to demonstrate that they have incurred business costs as a result of the default."

Ian Cognito

10:27 AM, 26th January 2019
About 2 years ago

My reading of the Bill, is that a referencing fee can be asked for provided the prospective tenant is offered a reasonable alternative.

That reasonable alternative could be the prospective tenant providing a recent credit check, employer reference, landlord reference, 3 months bank statements etc.

If the referencing fee is set at a sensible level (maybe even subsidised by the landlord) then any sensible and genuine prospective tenant is likely to take the easy route and pay the referencing fee.

Colin McNulty

8:30 AM, 27th January 2019
About 2 years ago

This is terrible news for more marginal tenants. E.g. A tenant applicant offered a double deposit (equivalent to 2 months rent) because the husband has just taken redundancy. Whilst he was unemployed at the time of their applications, I was fairly sure he'd find another job quickly (which he did) and the double deposit mitigated my risk that he wouldn't. I was going to turn he down, had he not offered this double deposit. Now however, he wouldn't be able to do that.

It's not clear from the article if this only applies to new tenancies from 1st June? Or will it retrospectively apply to existing tenancies? What about tenancies that are now on a periodic basis?

Michael Barnes

17:00 PM, 27th January 2019
About 2 years ago

Reply to the comment left by Colin McNulty at 27/01/2019 - 08:30
It applies to new agreements from 1 June
It does not apply to spts arising from agreements made before 1 June EXCEPT that it applies to all tenancies from 1 June 2020.

Note that S30 refers to "agreement", not "tenancy".

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