Implications of the Tenant Fees Act 2019 for Landlords

The provisions of the Tenant Fees Act 2019 (the “Act”) came into force on 1 June 2019. The Act prohibits landlords from charging certain fees or requiring certain payments that are not specifically permitted by the Act (the “Ban”), and applies in relation to any tenancy agreement, student let or licence to occupy housing in the private rented sector. The Act does not require landlords to pay back any amounts that may have been charged before 1 June 2019.

Payments under the Act

Payments permitted under the Act include: the rent; a refundable tenancy and/or holding deposit (subject to certain caps); payments for varying the tenancy (at the tenant’s request), payments associated with early termination of the tenancy (at the tenant’s request), payments in respect of utilities and council tax and any default fees (where provided for in the tenancy agreement). All other payments are prohibited under the Act, including any amount that exceeds the deposit caps. The Ban will be rolled out in two stages:

  1. 1 June 2019: landlords will be prohibited from charging their tenants any amounts other than those listed above when entering into any new tenancies and/or when renewing or ending an existing tenancy (e.g. set up fees, credit-check fees, inventory check fees, check-out fees and fees for professional cleaning services).

    Where a tenancy was entered into before 1 June 2019, landlords will be permitted to charge their tenants any amounts that are written into their tenancy agreements (e.g. check out fees) until 31 May 2020.
     
  2. 1 June 2020: landlords will be prohibited from charging their tenants any amounts other than those listed above irrespective of when the tenancy agreement was entered into and whether the amounts have been charged in respect of setting up a new tenancy and/or renewing or ending an existing tenancy.

    The provisions of any tenancy agreement requiring payment of amounts other than those above will no longer be binding from 1 June 2020. If a landlord receives such payments after 1 June 2020, it must be returned to the tenant within 28 days.
Points to Note

Landlords will be prohibited from serving a valid section 21 notice under the Housing Act 1988 for as long as they are in breach of the Act and should repay any unlawfully charged amounts to the tenant or apply, with the tenant’s consent, any unlawfully charged amounts towards the tenant’s rent or tenancy deposit. A new form section 21 notice (form 6A) will replace the current version to coincide with the introduction of the Act.

The Act also contains specific requirements as to how a holding deposit should be dealt with. Additionally, with some limited exceptions, the Act forbids landlords from requiring tenants to enter into a contract with a third party for a service or insurance.

If a landlord acts in breach of the terms of the Act (e.g. by requesting payment of any fees other than those permitted under the Act) it may be fined up to £5,000 and face criminal charges if it commits a further breach of the Act within 5 years. As an alternative to prosecution, an enforcement authority may impose a fine of up to £30,000 where it is satisfied beyond reasonable doubt that a landlord has acted in breach of the Act.

Next Steps

Landlords should read the Government’s guidance in detail to familiarise themselves with the provisions of the Act, and review their standard form tenancy agreements to ensure compliance with the Act. We also suggest that landlords begin reviewing their existing tenancy agreements to ensure compliance and to keep detailed records of any payments requested from their tenants (together with supporting invoices) to justify those payments if required to do so at a later date.

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