The Tenant Fee Act is an important piece of legislation in the United Kingdom that has significant implications for landlords. This act aims to protect tenants from unfair fees and ensure transparency in the rental market. In this guide, we will explore the key provisions of the Tenant Fee Act and its impact on landlords.

Understanding the Tenant Fee Act

The Tenant Fee Act, which came into effect in June 2019, regulates the fees that landlords and letting agents can charge to tenants in England. The act applies to assured shorthold tenancies, student accommodations, and licenses to occupy. It prohibits landlords from charging certain fees and introduces restrictions on others.

Key Provisions of the Tenant Fee Act

1. Deposits and Holding Deposits

Under the Tenant Fee Act, landlords are only allowed to charge a maximum security deposit of five weeks’ rent (or six weeks if the annual rent exceeds £50,000). Holding deposits are capped at one week’s rent and must be refunded within seven days or applied towards the first month’s rent.

2. Rent and Renewal Fees

Landlords cannot charge fees for the granting, renewal, or continuation of a tenancy agreement, except in limited circumstances such as early termination or changes requested by the tenant e.g. adding/replacing a tenant. Rent increases are also regulated, and landlords are required to provide at least one month’s notice for any changes.

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3. Changes to Default Fees

Default fees, such as late payment charges, are subject to restrictions under the Tenant Fee Act. Landlords can only charge reasonable costs incurred due to a breach of the tenancy agreement, and these costs must be supported by evidence.

4. Restrictions on Third-Party Services

The act prohibits landlords from requiring tenants to use specific third-party services, such as cleaning or gardening services, as a condition of their tenancy. Tenants have the freedom to choose their own service providers.

Complying with the Tenant Fee Act

To ensure compliance with the Tenant Fee Act, landlords should:

• Review their existing tenancy agreements and remove any prohibited fees.
• Understand the restrictions and permissible charges under the act.
• Provide clear and transparent information to tenants about permitted fees and charges.
• Keep accurate records of all payments received from tenants.

Penalties for Non-Compliance

Failure to comply with the Tenant Fee Act can result in severe penalties for landlords. The penalties include fines of up to £5,000 for the first offence and up to £30,000 for subsequent offences. In addition to financial penalties, landlords may be subject to banning orders, preventing them from letting properties.

Tenant Fee Act FAQs

1. Can landlords charge fees for referencing and credit checks?

No, landlords cannot charge fees for referencing or credit checks. These costs are considered part of the landlord’s business expenses and should not be passed on to tenants.

2. Are there any exceptions to the deposit cap?

Yes, there are a few exceptions to the deposit cap. If the annual rent exceeds £50,000, landlords can charge a maximum deposit of six weeks’ rent instead of five weeks’ rent.

3. Can landlords charge for repairs or maintenance?

Landlords are responsible for repairs and maintenance as part of their obligations under the tenancy agreement. They cannot charge tenants for general wear and tear or repairs that are their responsibility. However, if there is damage caused by the tenant’s negligence, landlords may be able to recover the costs.

4. Do the fees apply to existing tenancies?

The Tenant Fee Act applies to all new tenancies and renewals from June 1, 2019. For existing tenancies that started before this date, the act does not apply until the renewal or extension of the agreement.

Conclusion

The Tenant Fee Act is a significant piece of legislation that has brought about important changes in the rental market in the United Kingdom. As a landlord, it is crucial to understand the key provisions of the act to ensure compliance and avoid penalties. By reviewing and updating tenancy agreements, being transparent about permitted charges, and adhering to the restrictions outlined in the act, landlords can navigate the rental market successfully while providing fair and transparent services to tenants.

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