The Tenant Fees Act came into effect on 1st June 2019 applying to all agents and landlords in England. The Act restricts the amount that you can ask for security & holding deposits. It also prohibits certain fees. Penalties of up to £5000 apply for a first breach of the act, or £30,000 and more for subsequent breaches.
In Wales, the “Renting Homes (Fees etc.) (Wales) Act 2019” was introduced on 1 September 2019. It is similar to the Tenant Fees Act but has some important differences.
This short guide outlines what you can and cannot charge for in England.
The Tenant Fees Act allows you to charge for the rent, a refundable security deposit, refundable holding deposit, change of tenancy, early termination fee, utilities, communication services, TV licence, council tax and fees for late rent & lost keys.
You cannot ask tenants to pay for any item other than the Tenant Fees Act explicitly allows. For example, you may no-longer charge for viewing, referencing, credit-checking, administration, inventory, renewal or check-out fees.
The maximum level of security deposit depends on the total annual rent. If they are paying £50,000 or above, it’s six weeks’ rent, otherwise it’s five weeks’ rent. The Governments’ own guidance on how to calculate this follows a simple formula that assumes an exact 52 week / 12 month year.
You may ask for a holding deposit of up to one week’s rent to reserve a room or property. The Act puts new obligations on the landlord to give clear information on the purpose and amount of the deposit, the proposed rental terms, and the deadline for reaching agreement. You may only take one holding deposit at a time for the same property or room, and must refund the money within 7 days of the rental starting, the landlord withdrawing, or the deadline passing.
You can only retain a rental holding deposit if the prospective tenant gives false or misleading information, fails a right-to-rent check, withdraws from the agreement through no fault of the landlord, or fails to take reasonable steps to start the rental.
For rental agreements in place before 1 June 2019, you could continue to charge fees written into that agreement until 31 May 2020. Since 1 June 2020, you must not charge any prohibited fees. You will not need to adjust the rental deposit for pre-existing agreements.
No, there is no special provision for pets, or for any other special deposit items. The overall maximum permitted rental deposit rules in England will still apply.
Where the rental agreement is in joint names between two or more sharers, and those tenants request a change of sharer, you may charge costs up to £50, or higher actual costs if reasonable and supported by receipts or invoices.
Local authorities will usually treat a first breach as a civil offence with a financial penalty of up to £5,000. They can fine up to £30,000 for further breaches within 5 years. Or they can prosecute the case as a criminal offence, with an unlimited fine, at their discretion.
More Information on the Tenant Fees Act in England
For more detailed information on the Tenant Fees Act, HM Government provides the following guides:
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