From 1 June 2019 all new tenancies must comply with the Tenant Fees Act 2019 (the 'Act'). Existing tenancies should also be compliant with the Act by 31 May 2020, or will be considered in breach. The Act is intended to limit the payments landlords and agents can charge tenants with residential tenancies, including Assured Shorthold Tenancies, student accommodation and licences to occupy.
The Act means that landlords and agents can only charge specific "Permitted Payments:
- Rent: The first year's rent must be in equal instalments. Any rent review clause within the first year of the tenancy must allow amendment up and down.
- Security Deposit: This remains broadly the same except that the amount chargeable will be capped. If the tenancy's total annual rent is less than £50,000, the maximum deposit that can be charged is five weeks' rent. A maximum of six weeks' rent can be charged for annual rents above £50,000.
- Holding Deposit: A landlord can still require a holding deposit, but this will be capped at one week's rent. A landlord cannot obtain more than one deposit for the same property and it must be refunded within seven days of entering into the tenancy agreement or deciding not to proceed.
- Alteration Fee: If a tenant requests an alteration to the lease the landlord can charge up to £50, plus any reasonable costs, if evidenced.
- Tenant's Early Termination: If a tenant requests to end the tenancy early, either before the end of the fixed term or end of its notice period, the landlord can require a tenant to continue paying the rent until the original termination date, but cannot ask for it to be paid in a lump sum. The landlord can charge any reasonable costs incurred in arranging for a tenant leaving early. If a new tenant is found, the rent is only payable up to the start of the new tenancy.
- Bills: The landlord can ask a tenant to pay utility, communication and council tax bills direct to the supplier or to themselves to be paid on the tenant's behalf. If payment is made through the landlord, they cannot charge any amount over the bill amount.
- Charges for Late Payment: If the landlord wishes to charge for late payment it must set this out in the tenancy agreement. No fixed penalties can be charged, and interest can only be charged if rent is overdue by 14 days or more and at a rate no higher than 3% above the Bank of England's base rate.
- Replacement of Keys: The landlord must set out in the tenancy agreement details of the payments that will be charged for replacement keys. The tenant can only be required to pay reasonable costs for replacement of keys and this must be evidenced by the landlord.
The Act means that landlords and agents will newly be responsible for many of the costs involved with setting up, renewing and ending a tenancy. They will have to pay fees such as those relating to creating an inventory, professional cleaning and legal fees.
If the landlord charges a cost other than a Permitted Payment, once the Act comes into force, it may be a civil offence with a financial penalty of up to £5,000. If another breach is committed within 5 years the landlord will have committed a criminal offence with an unlimited fine.
Clapham & Collinge Solicitors provide expert advice on all Landlord and Tenant work including lease negotiations, assignments and surrenders.
For more information or to discuss your individual circumstances in further detail, contact us today on 01603 693500 or email us using the 'Make an enquiry' form. Appointments available at our Norwich, North Walsham and Sheringham offices.
*This article is provided for general information purposes only and does not constitute legal or other professional advice.