The Tenants Fee Ban – what you need to know

You will no doubt be aware from reports in the national press and through various TV channels, any fees charged to a tenant for granting a new tenancy, the renewal and continuance of a tenancy will be banned.

Deposits will be capped at the equivalent of 5 or 6 weeks depending on whether the annual rent is under or over £50,000 per annum and holding deposits, if taken, must be the equivalent of 1 week’s rent. It is important to remember that these elements of a tenancy will be governed by law and that this requires changes not only to documentation but also the processes relating to the way in which tenancies are executed. Time frames and strict rules will apply to the holding deposit and any deposits which were taken in relation to existing tenancies will have to be reduced if they are above the 5 or 6 weeks cap.

There will, however, be Permitted Payments that can be charged to tenants:

1. Interest on late rent set at 3% daily above the Bank of England base rate
2. A payment of lost keys or security devices, the maximum charge being £50.00 inc VAT.
3. Early termination (surrender) once again set at £50.00 inc VAT. If a higher payment is charged, the landlord/letting agent must demonstrate in writing why.
4. Variation or novation of a contract where the tenant is in situ – the most common request being change of sharer. The payment required would be £50.00 inc VAT unless one can demonstrate in writing why the charge being made would be higher.

The Tenant Fees Act 2019 will also make a provision for changes to the Consumer Rights Act 2015. In short, letting agents will be required to display all fees charged to their consumers on all third-party websites including social media platforms, as well as stipulating who provides the Client Money Protection insurance and which Redress Scheme the letting agent belongs to.

No fees in relation to renewals, inventories, check-in/check-out, missed appointments will be permitted. A tenant will be required to receive any repayment of fees taken within 28 days of the offence being made. Please note that the penalties will be quite severe – an initial fine of £5,000 and then possible fines of up to £30,000 and a knock on effect if you wish to serve notice. Trading Standards based in Bristol will be the enforcement organisation overseeing this legislation.

Rest assured that we will be dealing with all the elements relating to new tenancies and all the managed properties we currently oversee. It is important to bear in mind that whilst many letting agents are focusing on the income element of the tenant fee ban, we are focused on the changes in processes and systems to ensure that no landlords fall foul of this very key piece of legislation.