New Tenant Fees Ban Guidance

June 1st 2019
By: Thomas Morris
New Tenant Fees Ban Guidance

As of the 1st of June 2019, the Tenant Fees Act comes into force, and as late as mid-May, the Government was issuing new guidance about the changes. A version of the Act is already in effect in Scotland while the Welsh equivalent comes into effect from September. If you are a landlord and you are unaware of the Act, and how it impacts your business, it is crucial you get up to speed as quickly as possible.

The Act applies to all new tenancies and tenancy renewals from the 1st of June. As of the 1st of June 2020, the Act applies to all existing leases.

It is likely most landlords will have to change their operating procedures, as the majority of fees are no longer permissible under the Act. Landlords cannot charge tenants for references, administrative fees, inventory checks, credit checks, check-in or check-out services, renewal fees and landlords won’t be able to charge tenants when sending out notices and letters.

Landlords can still charge for rent, holding deposits, security deposits, where the tenant has defaulted on the rental agreement, when the tenant requests a chance to the tenancy agreement and when the tenant requests the tenancy terminates early.

Changes to holding deposit

Holding deposits are now capped at a maximum of one weeks’ rent. From accepting the holding deposit, landlords have 15 days to rule whether the tenant’s application is successful. If the application isn’t successful, the landlord has seven days to return the holding deposit.

However, if the tenant fails a check, doesn’t provide information or provides false information, the landlord doesn’t have to return the full holding deposit. When the landlord accepts the tenancy application, the holding deposit should be returned in seven days, although this money can be used as part of the security deposit or first months’ rent.

Changes to security deposit

The cap on the security deposit is now five weeks’ rent when the yearly rent is less than £50,000. If the annual rent is £50,000 or more, the new cap on the security deposit is six weeks’ rent.

Landlords cannot charge fees on top of costs

If the landlord incurs a loss in their business due to the tenant, they can recoup this money. If the tenant loses house keys, the landlord can pass the cost of replacing these keys on to the tenant. However, the landlord cannot ask the tenant to pay any more than the cost of replacing the keys. Landlords are advised to retain receipts to prove the costs involved with any claim.

Also, if a tenant leaves the property early, the landlord can only request lost payments. As an example, if a tenant left the rental accommodation with two months left on the rental agreement, and the landlord moved a new tenant in after one month, the former tenant is only liable for one month’s rent.

If you are a landlord looking to ensure you comply with the Tenant Fees Act, contact your local Thomas Morris branch, and we’ll be delighted to offer guidance. Book a valuation at a time that is of suitable to you.